Speaker 1: Welcome to the Friends with Money podcast, brought to you
Speaker 1: by Money Magazine, creating financial freedom for Australians since nineteen
Speaker 1: ninety nine.
Speaker 2: Hello and thanks for joining us for another episode of
Speaker 2: Friends with Money, money Magazine's podcast to help you earn, save,
Speaker 2: and achieve your financial goals. My name is Tom Watson,
Speaker 2: AC and journous here at Money Magazine, and as always
Speaker 2: it is a pleasure to be with you, no matter
Speaker 2: our age or life stage. I think we can all
Speaker 2: appreciate the importance of retirement planning, but figuring out how
Speaker 2: to get started or even what to do next if
Speaker 2: you've already got the ball rolling, we feel pretty confusing
Speaker 2: and maybe even overwhelming for a lot of people. The
Speaker 2: good news is that technology is helping to change the
Speaker 2: game here though, Whether you're in your early career and
Speaker 2: just beginning to save, or you're refining your strategies as
Speaker 2: retirement rows closer, digital tools are shifting the way that
Speaker 2: we approach financial planning and hopefully making things easier and
Speaker 2: making things more accessible and fingers cross, making things they
Speaker 2: are a little bit less intimidating. So on today's episode,
Speaker 2: we are going to dig into how these digital tools work.
Speaker 2: Who they'refore and why they could prove to be a
Speaker 2: bit of a game changer, and they're very pleased to
Speaker 2: say that. Joining us today to help us unpack this
Speaker 2: topic for us is one of our favorite guests on
Speaker 2: Friends with Money and possibly the guest with the best voice,
Speaker 2: at least voice forverro that we have on. It's Jeremy Lack,
Speaker 2: financial advisor with a talentra super financial planning. Jeremy, welcome
Speaker 2: back to the show.
Speaker 3: Thanks Tom, always a pleasure to join the conversation, and
Speaker 3: thanks for that very warm welcome as well.
Speaker 2: I'm glad you enjoyed the little nods to your fantastic voice. Jeremy.
Speaker 2: Let's die writing because we got a lot to cover today.
Speaker 2: What are these digital tools and ultimately how can people
Speaker 2: actually deal with them?
Speaker 3: It's a great question. So in the financial planning space,
Speaker 3: digital tools are being used to help people explore a
Speaker 3: range of different options to run different scenarios and better
Speaker 3: understand the steps they can take now to improve their
Speaker 3: financial future. Many super funds Teltra superincluded, are now offering
Speaker 3: these sorts of tools to help empower their members. In
Speaker 3: some instances, financial advisors might also use them to assist
Speaker 3: in meetings with clients as well.
Speaker 2: And Jeremy, are these for everyone or are they just
Speaker 2: for retirement planning purposes?
Speaker 3: Yeah? Look, ultimately they're making financial advice more accessible for everyone,
Speaker 3: which is a great thing. Some tools are more focused
Speaker 3: on time planning, but there's others that address a range
Speaker 3: of different needs as well. It's worth mentioning Also, you
Speaker 3: don't need to be a sophisticated investor or particularly tech
Speaker 3: savvy either. The idea is that they're designed to be
Speaker 3: really interactive and very easy to use.
Speaker 2: Excellent, Okay, So I don't need to be a proper
Speaker 2: finance wiz to get to grips within them. So Jeremy, well,
Speaker 2: what kind of things are we you know, are people
Speaker 2: actually doing with these tools? Then?
Speaker 1: Yeah?
Speaker 3: So different super funds are offering various online tools and calculators.
Speaker 3: Some will be available to everyone and just available on
Speaker 3: their public website so that anyone can go and have
Speaker 3: a look at them and a play around. Others might
Speaker 3: just be for members and you might need to log
Speaker 3: into your online super account or portal or access them
Speaker 3: in some other way. Some examples so Telfraserver offers tools
Speaker 3: to help you pick an investment option in your account
Speaker 3: to see how long your money will last, but also
Speaker 3: to learn about the impacts of things like taking a
Speaker 3: career break or changing jobs, or even exploring different income
Speaker 3: options that you might use in retirement.
Speaker 2: Those also sounds very useful to me. But I want
Speaker 2: to pick you up on that kind of investment options
Speaker 2: point in particular, Jerem, can you perhaps give us a
Speaker 2: quick walkthrough of how someone would actually use a tool
Speaker 2: to pick an investment option, because it's obviously an area
Speaker 2: that people will probably be really interested in looking into,
Speaker 2: but might find a bit tricky to actually approach.
Speaker 3: Yeah. Absolutely, and understandably it can feel pretty daunting to
Speaker 3: a lot of people. Teltra Super has an Investment Choice Selector,
Speaker 3: which is a tool that's designed to help members understand
Speaker 3: which Teltra Super investment option might work best for them.
Speaker 3: The whole process takes around seven minutes to complete, and
Speaker 3: you essentially answer a few short questions online around your
Speaker 3: investment return preferences, your attitudes to risk, and your investment timeline.
Speaker 3: What you then get once you've completed that is a
Speaker 3: recommendation regarding your risk profile and investment option, which comes
Speaker 3: as a digital statement of advice. It's really helpful the
Speaker 3: fact that this tool also helps to explain the reasoning
Speaker 3: behind its suggestions as well, So it's not just about
Speaker 3: showing you an option. It gives you context so that
Speaker 3: when you've got that, you can make an informed choice
Speaker 3: with confidence. From there, you can either change the investment option,
Speaker 3: seek further assistance, or leave the decision for another day.
Speaker 3: It's entirely up to you.
Speaker 2: And just to pick up on one thing there, Jeremy.
Speaker 2: For those who might not be totally ofay with the term,
Speaker 2: what do you mean by risk profile?
Speaker 3: Yes, so a risk profile is essentially a way to
Speaker 3: measure how comfortable someone is with taking financial risk when
Speaker 3: it comes to their investments. Inherently there is a trade
Speaker 3: off between risk and return, so when people pursue higher returns,
Speaker 3: they usually experience more short term volatility in the value
Speaker 3: of their investment. For those that prefer less volatility, the
Speaker 3: trade off is typically that long term returns are likely
Speaker 3: to be lower and probably important to st there's no
Speaker 3: right or wrong here. It's all about finding the right
Speaker 3: balance that works for each individual based on their personal circumstances.
Speaker 2: Right. So it's a bit like in theory trying to
Speaker 2: work out how much of a rollercoaster riot you're willing
Speaker 2: to go on with your money.
Speaker 3: Yeah, exactly. And everyone's comfort level is different, and it
Speaker 3: can depend on a range of things, like you know
Speaker 3: how close you are to retirement, what your financial goals are.
Speaker 3: Potentially people's overall financial position may have some bearing as well,
Speaker 3: and even things like your personality or prior investment experience
Speaker 3: will often have an impact to maybe as an example,
Speaker 3: so younger people might be more willing to take risks
Speaker 3: because they have more time to recover from any dips
Speaker 3: in the market. On the other hand, for those nearing retirement,
Speaker 3: it often becomes a bit of a balancing act between
Speaker 3: generating enough returns so that assets last a lifetime, but
Speaker 3: also having enough stability so that if and when there
Speaker 3: is some volatility in markets they can ride that out.
Speaker 3: It's probably also worth pointing out that it's pretty normal
Speaker 3: for someone's risk profile to change over time as they
Speaker 3: go through the different stages of life.
Speaker 2: So what do you think of I guess the benefits
Speaker 2: here of getting a bit of advice in this area.
Speaker 3: Yeah, picking the right option can have a massive impact,
Speaker 3: So it can amount to tens of thousands of dollars
Speaker 3: difference to someone's balance when they retire, so quite considerable,
Speaker 3: and the impacts of that from there can be significant,
Speaker 3: So that's a massive impact. Beyond that, I think what
Speaker 3: it also helps to do is improve people's financial literacy.
Speaker 3: It will help more people engage through the superannuation and
Speaker 3: make good choices, and as you know, Tom big advocate
Speaker 3: for that.
Speaker 2: Not a surprise, Jeremy. We've covered investments in a way,
Speaker 2: so it'd be great to I guess shift gears a
Speaker 2: little bit to what I imagine is going to be
Speaker 2: one of the most common questions that people have in
Speaker 2: the retirement context, that is, how long will my super last?
Speaker 2: So kind of kind of contact with digital tools here.
Speaker 3: Yeah, and it's often the big question that we get
Speaker 3: as advisors, and digital tools are also fantastic for helping
Speaker 3: to address this as well. So you know, you might take,
Speaker 3: for example, say a retired couple in their mid sixties
Speaker 3: who recently used Teltrasuper's retirement Lifestyle planner. With a combined
Speaker 3: superbalance of eight hundred and fifty thousand dollars, they discovered
Speaker 3: that on their desired annual income of eighty thousand dollars,
Speaker 3: their savings were estimated to last until they both reached
Speaker 3: the age of ninety one, so that was pretty informative
Speaker 3: in this situation. But beyond that, the calculator also provides
Speaker 3: insights into when they might start receiving the government age
Speaker 3: pension and how these payments might actually increase over time
Speaker 3: as well. In addition, it also highlights the potential long
Speaker 3: term impacts of withdrawing extra funds for things like holidays
Speaker 3: or improvements to the home, upgrading the car, or unexpected
Speaker 3: health expenses. So it really helps to provide a bit
Speaker 3: of a complete picture that people can adjust to their circumstances.
Speaker 2: That legitimately sounds really useful. I mean having that kind
Speaker 2: of specific income and age to kind of at least
Speaker 2: latch onto it as a bit of a guide. But
Speaker 2: what if it tells the tool tells the couple that
Speaker 2: you know, instead, that their super won't last long enough,
Speaker 2: how do they know what to do next? So good question, Tom.
Speaker 2: This is a common reality that people face, which is
Speaker 2: where using something like the Retirement Lifestyle Planet can really
Speaker 2: assist people in assessing their options. For example, if you
Speaker 2: see that you are likely to write out of funds
Speaker 2: in your lifetime, the calculator can help you understand how
Speaker 2: different scenarios could impact how long you super could last.
Speaker 2: For example, people can see that the impact of working
Speaker 2: a few extra years might help them build their retirement
Speaker 2: savings and then extend how long that lasts extends lifetime
Speaker 2: of that in retirement, so they can see the impact
Speaker 2: of working a couple of extra years or a few
Speaker 2: extra years. They can look at the impact of, say
Speaker 2: making additional contributions as well, or even picking a different
Speaker 2: investment option so they can adjust and taylor so that
Speaker 2: they have more insight into the options that are available
Speaker 2: to them to make it work. They might also think
Speaker 2: about using another tool called the lifetime income calculator to
Speaker 2: explore how combining an annuity style lifetime pension with other
Speaker 2: sources of income such as an account based pension and
Speaker 2: the government age pension can provide a steady stream of
Speaker 2: income in retirement. This lifetime income calculator is particularly useful
Speaker 2: when it comes to people who worry about running out
Speaker 2: of money in their later years as well. I can
Speaker 2: definitely see the benefits of using tools just like that
Speaker 2: and the kind of investment options calculator that we're talking about.
Speaker 2: For Jeremy. But I guess my question that's kind of
Speaker 2: popped in as the converssion has gone on, is where
Speaker 2: do you see these tools fitting in with more traditional
Speaker 2: financial planning, at least as we know it at the moment.
Speaker 2: Are these tools, I guess, the way of the future,
Speaker 2: or is there kind of a role for both?
Speaker 3: I mean, I hope there's a role for both, because
Speaker 3: I quite like my job, But realistically, I believe that
Speaker 3: there will always be a place for traditional financial advice
Speaker 3: for a few reasons I think so. Firstly, not everyone's
Speaker 3: going to be comfortable with self serving online. There's a
Speaker 3: lot of people who prefer to work with a human
Speaker 3: who understands their situation, particularly when the conversations that we
Speaker 3: have and the advice that we provide is so linked
Speaker 3: to personal circumstances and goals. There's also a significant shortage
Speaker 3: of advisers in Australia as well, and the fact that
Speaker 3: digital tools allow some people to self serve is absolutely
Speaker 3: a positive as it means more people can ultimately get
Speaker 3: the assistance that they need. Also, I just add that
Speaker 3: advisors are also able to zoom out and look at
Speaker 3: the broader picture, particularly when providing comprehensive advice that covers
Speaker 3: a range of complex topics. And for all the progress
Speaker 3: we're seeing digital tools, and it's really moving along quite
Speaker 3: quickly and quite impressive. In the developments we're seeing. I
Speaker 3: think advisors will still play and continue to play a
Speaker 3: crucial role when looking at that sort of big picture,
Speaker 3: comprehensive advice piece. But I think what we'll also see
Speaker 3: is a lot of people start to take that hybrid
Speaker 3: approach where they use the online tool versus a starting
Speaker 3: point almost and then from their maybe look to engage
Speaker 3: with an advisor if they feel it's appropriate. And as
Speaker 3: I said earlier, some advisors are also starting to use
Speaker 3: digital tools themselves, and I think there's absolutely a place
Speaker 3: for both formats well.
Speaker 2: From a personal perspective, I quiet larned the idea behind
Speaker 2: bridge approach where I can kind of go in and
Speaker 2: have a play around with these calculators, seeing what they're saying,
Speaker 2: and then maybe get some advice with a real human
Speaker 2: like you're like yourself down the track. But I'm sure
Speaker 2: listeners will also be happy to hear that your job
Speaker 2: is safe for now, Jeremy. That will be nice, right.
Speaker 2: We have covered a ton the ground but soundly that's
Speaker 2: where we are going to leave things for today. So Jeremy,
Speaker 2: thank you so much for joining us again and for
Speaker 2: breaking this all down. It's been brilliant having you back
Speaker 2: on the show.
Speaker 3: My absolute pleasure. Tom, thanks for having me on the
Speaker 3: show again. Hopefully the listeners can check out some of
Speaker 3: the tools that they're super Fund offers and take that
Speaker 3: first step towards the comfortable retirement.
Speaker 2: Absolutely would encourage people to jump on and have a
Speaker 2: play around, have a look. I think it's really interesting
Speaker 2: and you know, even if it starts a bit of
Speaker 2: a conversation or an idea or a step towards you know,
Speaker 2: retirement and retirement goals and wonderful stuff. Anyway, that is
Speaker 2: it to this episode of the Friends with Money podcast.
Speaker 2: But I forget to jump on our website moneymag dot
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Speaker 2: Or you can go grab yourself a copy of the
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Speaker 2: As always, Friends with Money will be right back in
Speaker 2: your podcast feed next week. So until then, my name
Speaker 2: is Tom Watson.
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