Five common questions clients have about the next six months

As Australia starts to reopen after months in lockdown, national attention has quickly shifted to the economic ramifications of the pandemic. Kate Cowling explores what some of the key client questions are relating to the next six months.

At an individual level, people are breaking their isolation holding patterns and assessing how the fallout will affect their short-to-medium term financial futures.

Advisers are well-placed to address the quandaries clients will face over the next six months, which will obviously vary depending on personal financial circumstances.

Having said that, knowing the common questions clients have been asking other advisers may be helpful from a strategic point of view, and to plan client communications.  

  1. How long will it take for my super to recover?

Not surprisingly, the questions on the lips of self-funded retirees and pre-retirees alike largely relate to super. They include variations of ‘when will the market will recover?’ and ‘what can be done to offset losses?’

Advisers say they’ve fielded inquiries from across the age spectrum on super. However, for those who are already living on their retirement savings or approaching that phase, there is added element of doubt and fear.

Robyn McDonnell is in her 60s and says she’s lost about 15 per cent of her super in two months.

“I draw my super as a lump sum, but I’ve been aware of the falling balance and I’m just not really sure how long it will last,” she says.

Despite having a conservative asset allocation, she says she’s been in the dark about how her fund has been managing the crisis and has been looking to her adviser for support about how to ride through the next six months.

  1. Should I apply for early super access?

At the other end of the spectrum, the possibility of accessing superannuation early has led many with longer to wait until retirement to question the pros and cons of making an early withdrawal.

“I have been advising my clients to avoid early access to super, except in the most extreme circumstances,” one adviser says. “The longer-term cost is not worth the short-term benefit.”

  1. Am I eligible for government or tax support?

With more than a million Australians out of work due to COVID-19, many people who have never previously qualified or asked for government help are turning to the public purse.

A common concern has regarded what employees can do if they lose their job and find themselves ineligible for JobKeeper, due to their industry or the length of their tenure.

In this scenario, advisers have been asked about other support options or the reassessment of goals.

Similarly, concerns have been raised about how tax will be affected if there’s a reduction in the rent the tenant is paying. The ATO has updated its guidance on this area.

  1. Is now the time to invest in property or shares?

Some clients are wondering whether the global instability has created a buying opportunity.

The ASX had fallen more than 1500 points at the end of April on its January value, while the value of auction sales has similarly dropped in all key markets.  

However, analyst Louis Christopher of SQM Research suspects many potential property buyers will be keeping their powder dry for now, primarily due to the uncertainty.

“Anyone that is worried they will lose their job or their business, won’t be seriously thinking of taking out a home loan to buy into the property market,” he says.

  1. How will this year affect my goals?

No-one likes uncertainty and many people are concerned this year will move them further away from their goals.

The pandemic was unexpected for most and some fear it will bring unexpected consequences to wealth and security.

Several advisers say they have individually got in touch with clients to offer reassurance about longer-term plans.  

While certain goals – like immediate travel plans – may be out of reach for now, hearing others are unaffected provides a level of comfort in volatile times.

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