If you watch the news you may have noticed that the Federal Treasurer Scott Morrison was in Tasmania this week and specifically in our electorate, Braddon. MFG was hosting a business get together on Tuesday night and Mr Morrison, in Burnie overnight, took the opportunity to attend.
In the process he officially opened our offices and fielded questions from those who attended. Peter, never one to miss an opportunity to further the cause of clients and the financial planning industry, put two questions to Mr Morrison.
Firstly, on Capital Tax Gains Crystallisation for assets transferred between superannuation funds.
Currently as it stands, if you want to transfer your investments within super between some funds there is no ability to transfer the assets without incurring a sale and potentially incurring capital gains tax.
This leads to poor outcomes for investors because some older products may have significantly higher fees, meaning they’d like to leave, but they are caught between a rock and hard place because transferring to a lower cost option will incur a capital gains tax bill.
Either way, they’ll have lower returns from fees or a lower balance from taxes. Neither is a good option and glaringly this isn’t an issue outside superannuation, where a share or fund can be transferred between accounts without requiring a sale and incurring a CGT liability.
While beneficial for investors, it also needed a political sell. Peter pointed out to Mr Morrison making super investments more portable would help avoid higher fees, which are tax deductable and divert money from the Commonwealth, while the outcome of larger retirement balances means less reliance on the Age Pension.
From the perspective of fairness and lowering Commonwealth outlays, Mr Morrison was receptive and keen for more details, which Peter promptly presented. We’re hoping we may hear something about this issue during the campaign.
Secondly, Peter pushed Mr Morrison on improving the transparency of those who offer financial advice. In other countries those seeking financial advice clearly know where conflicts of interest are. They understand if they’re dealing with a financial fiduciary who works for them, or a product sales person who works to sell their employer’s products – i.e. large banks and institutions.
Unfortunately, Mr Morrison conceded these changes were quite significant and would be hard to achieve. The lobbying power of the large financial institutions in Australia can’t be forgotten.
With that in mind, we believe it’s important for unbiased advisers to continually highlight their differences from the financial salespeople. So in the coming weeks we’ll have an announcement that further underlines our fiduciary credentials.
Braddon MHA Brett Whiteley, Peter Mancell & Federal Treasurer Scott Morrison Officially open MFG’s premises.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.
