In or out? Insurance within super isn't all it's cracked up to be.

Posted by Sean O'Kane & Neal Durling on 27 March 2019
In or out? Insurance within super isn't all it's cracked up to be.

The fields of insurance and superannuation are complex and filled with both options, and opinions. One of the latest (and loudest) opinions involves the recommendation from industry "experts" to take up personal insurance within your super fund.

The case for this stems largely from the default levels of cover that are provided through this process, with no underwriting required, making it simple for the member and cheap to administer for the super fund. Sometimes volume discounts mean premiums are also cheaper, but this isn't always the case. The more likely appeal is the fact that the premiums are debited from your super account so there's no out-of-pocket expense.

While this might sound good in theory, as is so often the case with financial planning, there is no one-size-fits all solution -  the best option for you depends entirely on your personal situation as well as consideration of the facts at hand. It's dangerous for members not to seek advice outside of their product provider (super fund) it means they aren't getting the full picture, including  the positives and negatives associated with their different options.

So what are the obvious problems in relying on the default insurance provided by your super fund?

Well, insurance is a basic concept dating back centuries, involving a group of people having each other's backs. Everyone pays in, hoping that they won't need to claim, but, if an unforeseen event happens, they receive a benefit to help support their family. It's a simple business that collects premiums, pays claims, makes a small surplus for reserves to cover future claims, and ideally makes a small profit for those making the market or taking the risk. Setting the premium is absolutely key for sustainability and needs to reflect the likelihood of claim each individual brings to the pool.

With guaranteed acceptance, which typically  occurs when you purchase insurance through your super fund, this process doesn't occur. As a result, this risk is typically managed in the following ways:

  • generally low levels of default insurance cover, which are likely insufficient on their own;
  • policy terms and conditions that are often more restrictive and difficult to claim on "any" rather than "own" occupation TPD, for example;
  • exclusions or restrictions on some benefits that cause high claims eg mental health;
  • exclusion of pre-existing conditions, meaning you're underwritten at claim time, leading to uncertainty at the worst time;
  • temporary income replacement benefits that are short term and cease if your condition becomes defined as permanent;
  • benefits cancelable by the insurer rather than non-cancelable provided you pay premiums; and
  • premium structures that don't offer the long-term premium savings offered by a level premium structure. 

Insurance through super has its place, just like Centrelink as a safety net has its place. And there are situations where an adviser might recommend this is retained or even extended, but to think it's a simple like-for-like comparison is naive at best. Additionally, if using your super to pay your premium is important for you (and of course there are a whole range of long-term implications of doing this as well) there are ways in which you can pay premiums for external insurance via rollover from your fund. So, contrary to popular belief, you aren't restricted to accepting your particular super fund's insurance product even if cashflow is tight.

If ever there was an area that requires the personal advice of a skilled practitioner who can really compare the pair, this is surely it. Just ask anyone who has had the need to claim.

Posted in: Insurance superannuation   0 Comments

When self-help is not a one-person job

Posted by Sean O'Kane & Neal Durling on 22 February 2019
When self-help is not a one-person job

There are times in life when you're better off not putting your head above the parapet, for fear of losing it. And so, with this in mind, it's perhaps no surprise that financial advisers have been largely silent in the wake of the Royal Commission.

While we feel some of the proposals in the final report may have unintended consequences if fully implemented, we feel that in other areas they may not have gone far enough. It's against this backdrop that Scott Pape's book, The Barefoot Investor, has stayed on the best sellers' list - not surprising given the absence of the FP industry having a voice. This has got us to thinking:

  • What is advice and why should clients not just read the book and do it all themselves?

We should show our hands here and disclose that not only have we read the book, but much of what he says closely aligns with our practice's advice philosophy. But we do think it's worth posing another question:

  • How many self-help / all-you'll-ever-need books do you have on your bookshelf?

We have everything from how to lower my blood pressure and chi running, to building your own home and we probably don't need to tell you it remains a work in progress.

  • So what's our point?

If, like us, you're a seeker of knowledge, believe you're a successful self-starter and reasonably disciplined, you buy these books with the intention of reading and understanding, but don't get around to the implementation. Usually, it also becomes apparent that it's more complicated than you first thought, that there are many options, or that it will take significant time, so the book becomes an interesting, but ineffective read.

  • So, is planning and coordinating your entire financial future as simple as it seems?
  • Is a one-size-fits-all approach right for everyone?
  • Is the increased risk of doing it yourself worth the money you're saving?
For some it might be, but through the next few articles we'll explore some of the key benefits that the right personal advice relationship can bring.

In the meantime, below is our advice philosophy, which outlines what we think a good advice relationship looks like.

Our Advice Philosophy

The main reason to seek financial advice or invest in a financial plan is not about having more money, but rather about enabling your finances to help you facilitate the life you want, now and into the future.

A good financial plan, therefore, always comes back to how it achieves this ultimate goal, without any surprises along the way.

This is why we spend a lot of time understanding our clients' goals, and how these evolve over time, to ensure our advice is directly in line with what you want out of your life, now and into the future.

Put yourself in the driver's seat

When it comes to your money, it's crucial that you're in control. It sounds straightforward, but for a lot of doctors this is not the case.

It doesn't need to be complicated, but you need to be on top of the basics knowing what you have coming in, what's going out, and then what you're left with.

Without this knowledge, it's very hard to make any sort of financial plans with confidence, and it's impossible to create financial independence if you consistently spend everything you earn.

Protect what you create

Insurance underwrites the risk of something going wrong while you're building your assets.

You are, and will continue to be, your most valuable financial asset, so we ensure all of our clients have comprehensive cover in place before embarking on creating wealth.

Investing in a comprehensive protection strategy is a positive step, as it ensures there are no surprises, and as your wealth builds and you become more financially secure, you can reduce your cover.

Own your lifestyle, don't borrow it

When money starts coming in, it's easy to get carried away living a lifestyle that's financially unsustainable, supported by borrowing.

It's never been easier for doctors to over-spend, as a result of a combination of low interest rates and over-generous lending by banks.

Just because you can borrow money, doesn't mean you should - having lots of debt will cause stress, restrict your choices, and limit your ability to invest and build funds for financial independence.

Having some debt is a part of life, but it's important to understand the opportunity cost of this and make decisions in the context of your overall situation and objectives.

Make informed financial decisions so that you can enjoy your money

Our strategy is to financially model your position, including all the lifestyle assumptions you wish to make, which means we can therefore predict, with reasonable accuracy, how your financial future will look.

Our advice, combined with all big financial decisions, are entered into the model so the implications of changes and decisions are known before you make them.

This process will allow you to have confidence in your finances so that you can enjoy the money you've worked so hard for.

Get the structure right

Restructuring assets can be a costly exercise, so it's important that we focus on buying assets in the correct entity, from the outset, whether that be in your own name rather than a trust, or super, or vice versa.

We help our clients understand the implications of different structures before any asset or investment purchases are made.

Make time your friend

The impact of compounding returns on investment is exponential growth, so we're big advocates of getting clients to start investing early.

$50,000 invested with an 8% return after 10 years is worth $108,000, after 20 years $233,000 and 30 years $503,000.

See where the money is made?

A long-term relationship

Your finances are a part of life that should always be a focus, no matter what stage of your life or career you're in.

This is why we aim to build long-term partnerships with our clients and use a structured ongoing review process to ensure you have the highest probability of achieving your financial goals.

We use our relationships with our clients to offer ongoing advice and financial coaching to enable you to be accountable for the plans we've made together.

Posted in: Financial planning   0 Comments

Kicking goals | The important step you're missing to achieve financial freedom

Posted by Neal Durling on 18 September 2018
Kicking goals | The important step you're missing to achieve financial freedom

Getting on top of your finances and working to build your personal wealth is an important step required in creating a business and life you love.

Often though, we set our sights too short and don't take the time to create a plan for what we want to achieve in our lives overall, which is a recipe for unfulfillment down the track.

When it comes to achieving financial freedom and contentment, there's an important step that often gets missed but that is crucial to setting yourself up for success and happiness in the long run.

Ready, set, GOAL

So, you're earning some money. You might even be saving some! But, while it's great to feel the accomplishment that comes with taking your finances to the next level, the most important component in planning for the future is setting some personal goals.

Having concrete goals that you're working towards is critical because it allows you to focus not just on the generation of wealth, but also on what that money is going to get you and how it will contribute to making your life better.

What does success look like?

It's important to establish clear goals that you want to achieve so that you can track your progress and celebrate your successes along the way, and the first step in this process is establishing what success actually looks like for you, over the course of your life.

This means taking a step back and thinking about your personal and family values and identifying what's really important to you in life. This might sound a bit philosophical, but unless you truly understand what makes you tick and the type of experiences you want to make your life enjoyable, you're well and truly putting the cart before the horse.

Help is at hand

Often, identifying and articulating these values can be tricky to do on your own, and it can be hard to pin down the specific goals and milestones that are going to make you happy throughout your life.

Meeting with an experienced financial adviser can often help in this regard, and should create the space for reflection; helping to steer your discovery of these values through thoughtful, exploratory questions and a lot of listening.  It often takes an objective opinion to help weed out the top, big-picture goals that are really going to make a difference in your life, so speaking with an expert who can support you in getting there makes sense.

It's important to take this big-picture view, because it can be easy to get hung up on short-term goals, which, while still important, change often and generally only offer temporary satisfaction - think, a new car, expensive holiday or that big house you're eyeing. These are all worthy short-term goals, but it's important to assess these through a big-picture lense to ensure they're helping you achieve the overall life you're envisioning.

Having these specific long-term goals nailed down, means that you have the building blocks for your life that, when achieved, will go a long way toward making you happy and fulfilled.


It's important to note that goal-setting is not a one and done exercise. No matter how much time we take "getting them right", it's inevitable that our values, and what we view as important, will change over time. This just means regular reviews of your goals are necessary to ensure what we're aiming for is still in line with what's going to make us the most happy.

If you need support getting in control of your money, we're here to help. Like most people need a personal trainer to get fit and stay fit, the same can be said about finance, so it's worth investing in professionals to help you get on track and stay there.

Get in touch today!

Posted in: Financial planning   0 Comments

Money management 101

Posted by Sean O'Kane on 16 August 2018
Money management 101

When it comes to keeping on top of your personal finances, it can be easy to overthink your approach and get overwhelmed. But although there are lots of things that you could worry about, it doesn't mean you should.

Easier said than done, we know.

Beware information overload

With our 24-hour news cycle, it can be hard to avoid the seemingly unending stream of things to add to our list of financial woes.

What's going to happen with property prices?

Are we on the brink of the next global finance crisis?

What's Trump going to do next?

But while these are all legitimate things to be thinking about, the key to managing your money effectively is to spend more time and energy concentrating on the things you can control about your finances.

And the best way to get in control (and stay there) is to keep it simple and, if in doubt, focus on two things:

  1. concentrate on your day job, be that working in your own practice or in the public system, to create the cash flow to build your personal wealth; and
  2. get a handle on your spending so you know what's going where (and why).

Systems are your friend

I've written previously about using an effective cash management system and how this can help you run your personal finances like you would your practice finances. To date, we've implemented this system for over 50 clients with excellent results.
For most, this is the first time they have a true picture of what is happening with their income, expenditure and thus their surplus cash flow. We're so excited about this as a business, as it allows the forward planning we do to help clients with their financial decision making to be far more accurate.
The other piece of the puzzle

Tracking your finances and understanding what you're spending your money on is all well and good, but the next step is making sure you do something with that information. And that means being in control of what you spend.

I've found that for a lot of clients, once we start tracking their expenditure, this automatically results in them thinking a bit more about how they spend their money. But I firmly believe that to be fully in control you need to go one step further.

Here's what you need to do:

  • work out a budget for your discretionary expenditure;
  • divide this by 52 to get to your weekly amount;
  • set up a discretionary expenditure account and have EFTPOS cards for this account;
  • transfer the weekly amount into this account;
  • use the account for all discretionary expenditure; and
  • stop using a credit card (seriously, we mean it!).

This is a system that I have been running for some time, and have also helped many clients implement, and I can honestly say it works!

If you need support getting in control of your money, we're here to help. Like most people need a personal trainer to get fit and stay fit, the same can be said about finance, so it's worth investing in professionals to help you get on track and stay there.

Get in touch today!

Posted in: Budget Financial planning Planning   0 Comments

What if there was a royal commission into accounting?

Posted by Matt Connor on 12 July 2018
What if there was a royal commission into accounting?

The banking royal commission has all but been and gone, but it's left us wondering what would happen if there was a royal commission into accountants?

Great accountants operate 100% in their clients' best interests, through a pure fee-for-service model, meaning they only charge and get paid for services that their clients actually need.

As with any industry, however, not all accountants are created equal, so If there was to be a an accounting royal commission, one of the major issues I believe would be in the spotlight is unnecessary complexity.

Complexity for complexity's sake

Where accountants would potentially come unstuck in a royal commission is for advising and servicing complex and unnecessary business and investment structures. Generally speaking, the more complexity involved, the more money that can be charged to manage it, so it makes sense that this is an area that's open to manipulation.

If you're dealing with an accountant that's not on the up and up, and are out to increase their bottom line at any cost, you could be the victim of being sold over-complicated and unnecessarily involved setups that you don't need.

Less is more

The starting point for any accountant should be to act in their clients' best interests at all times, however, further to this, it should ultimately be a focus to steer clients towards the simplest option available to them.

This isn't always easy.

The psychology of complexity is interesting - some people are sceptical of solutions that are too simple, often demanding the solution with all the bells and whistles, even when a simpler (and cheaper) solution will achieve the same result.

Trust is everything

It's critical that you can rely on your accountant to give you honest, impartial advice when it comes to your finances, and not put you into arrangements that are costly to administer and provide no added value.

Bottom line is, if your accountant is telling you you don't need to spend more money on a more complicated solution, you should listen!

Look before you leap

Before you get yourself locked in to a large, complex accounting structure, it's important to make sure you're working with an accountant that understands the value of simplicity and is most interested in offering you the least complicated proposal there is, with the best return.

Take the time to make sure you're comfortable with any proposed course of action before you get started. It can take a number of years and cost significant sums in tax to undo overly complex arrangements, and, often, structures that hold a large asset or business can cost more to unravel than it would cost to simply keep going until you're ready to exit, accountants fees and all.

So, if you find yourself in a complex setup and you're not sure of the benefits, ask your accountant why they've advised the strategy detailed in their proposal.

Better to take your time to scope out your requirements before you set up than race into a new structure that might hurt you in the long run.

Get in touch to learn more and find out how we can help you with your accounting needs.

Posted in: Tax   0 Comments

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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

The financial planning services are provided by Medical Financial Pty Ltd trading as Medical Financial Planning (AFSL 506557)