Benefit of advice display
The purpose of the benefit of advice section is to highlight the benefit of the advice provided. This is captured by the following data:
| Tab | Output type | Description |
|---|---|---|
| Summary of improved position | Table | The summary of the improved postion compares the advice model versus the no advice model across a range of metrics including: net equity, probability of outcome, tax, Centrelink, investment growth, income and expenses, debt, product fees and insurance levels. The table provides a 1 page snapshot of all areas whereby the adviser has improved the client/s situation. |
| Objective scorecard | Table | The objective scorecard is an analysis of what objectives were successfully achieved. |
| Objective trade-offs | Table | The trade-off table outlines the specific opportunity cost of each objectives, and the impact that implementing that objective has on the retirement outcome. |
| Benefit of advice attribution | Chart | The benefit of advice chart tracks the improved position in the advice model across the following areas; investment growth, tax payable, interest paid, Centrelink entitlement. |
Demonstrating the value of your advice
Upon determining the optimal set of recommendations the PrimeSolve engine will conduct a detailed stress test to review the individual attributes each recommendation offers. This is done by removing each recommendation from the model, and then re-optimising.
The alternative trial will force an alternative set of recommendations to be produced as the isolated recommendation will not be made available.
We are then able to observe the difference in results from each trial against the summary of improced position analysis to determine the exact benefit of each recommendation generated.
The alternative recommendation set can be generated and used as best interest analysis within the SOA document.
|
|
Without recommendation |
With recommendation |
|
||||
|
|
Client A |
Client B |
Joint |
Client A |
Client B |
Total |
Difference |
|
Objective scorecard |
|
|
|
|
|
|
|
|
Objectives |
5 |
5 |
12 |
5 |
5 |
12 |
0 |
|
Objectives met |
4 |
3 |
8 |
5 |
5 |
12 |
+4 |
|
Probability of meeting objectives |
|
|
62% |
|
|
|
76% |
|
Net Equity |
|
|
|
|
|
|
|
|
Year 1 |
$450,000 |
$525,000 |
$1,125,000 |
$459,000 |
$535,500 |
$1,147,500 |
$688,500 |
|
Year 5 |
$724,730 |
$845,518 |
$1,811,824 |
$808,915 |
$943,734 |
$1,848,060 |
$1,039,145 |
|
Retirement |
$1,879,762 |
$2,193,055 |
$4,699,404 |
$2,512,367 |
$2,931,094 |
$4,793,392 |
$2,281,026 |
|
Life expectancy |
$3,027,375 |
$3,531,937 |
$7,568,437 |
$3,087,922 |
$3,602,576 |
$7,719,806 |
$4,631,884 |
|
Retirement |
|
|
|
|
|
|
|
|
Expected retirement |
65 |
62 |
n / a |
65 |
62 |
n / a |
n / a |
|
Earliest retirement year |
65 |
62 |
n / a |
61 |
58 |
n / a |
-4 |
|
Max income in retirement |
$45,000 |
$45,000 |
$90,000 |
$50,000 |
$50,000 |
$100,000 |
$10,000 |
|
Years income will last |
25 |
25 |
50 |
28 |
28 |
56 |
6 |
|
Debt |
|
|
|
|
|
|
|
|
Years to pay off debt |
$10 |
$10 |
$10 |
$9 |
$9 |
$9 |
-1 |
|
Total non-deductible interest paid |
$152,000 |
$152,000 |
$304,000 |
$138,000 |
$138,000 |
$276,000 |
-$28,000 |
|
Total deductible interest paid |
$106,400 |
$106,400 |
$212,800 |
$151,800 |
$151,800 |
$303,600 |
$90,800 |
|
Tax |
|
|
|
|
|
|
|
|
Total tax paid – Year 1 |
$14,201 |
$19,456 |
$33,657 |
$13,491 |
$18,483 |
$31,974 |
-$1,683 |
|
Total tax paid – Year 10 |
$156,211 |
$214,016 |
$370,227 |
$148,400 |
$203,315 |
$351,716 |
-$18,511 |
|
Total tax paid – Lifetime |
$426,030 |
$583,680 |
$1,009,710 |
$404,729 |
$554,496 |
$959,225 |
-$50,486 |
|
Social security |
|
|
|
|
|
|
|
|
Benefit received – 1 year |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Benefit received – 5 years |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Benefit – lifetime |
$249,584 |
$298,000 |
$547,584 |
$287,022 |
$342,700 |
$629,722 |
$82,138 |
|
Insurance gap filled |
|
|
|
|
|
|
|
|
Life insurance |
$0 |
$0 |
$0 |
$400,000 |
$500,000 |
$900,000 |
$500,000 |
|
Total & Permanent Disablement |
$0 |
$0 |
$0 |
$450,000 |
$550,000 |
$1,000,000 |
$550,000 |
|
Income protection |
$0 |
$0 |
$0 |
$50,000 |
$65,000 |
$115,000 |
$65,000 |
|
Trauma |
$0 |
$0 |
$0 |
$50,000 |
$50,000 |
$100,000 |
$50,000 |
|
Other |
$0 |
$0 |
$0 |
$20,000 |
$20,000 |
$40,000 |
$20,000 |
|
Insurance premium |
|
|
|
|
|
|
|
|
Life insurance |
$550 |
$578 |
$1,128 |
$1,155 |
$1,213 |
$2,368 |
$1,240 |
|
Total & Permanent Disablement |
$420 |
$441 |
$861 |
$882 |
$926 |
$1,808 |
$947 |
|
Income protection |
$120 |
$126 |
$246 |
$252 |
$265 |
$517 |
$271 |
|
Trauma |
$50 |
$53 |
$103 |
$105 |
$110 |
$215 |
$113 |
|
Other |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Product scores |
|
|
|
|
|
|
|
|
Superannuation |
74 |
79 |
76.5 |
90 |
90 |
90 |
13.5 |
|
Pension |
74 |
79 |
76.5 |
90 |
90 |
90 |
13.5 |
|
Insurance |
72 |
64 |
68 |
85 |
82 |
83.5 |
15.5 |
|
Total product fees |
$1,298 |
$1,587 |
$2,885 |
$1,103 |
$1,349 |
$2,452 |
-$433 |
|
Portfolio |
|
|
|
|
|
|
|
|
Portfolio score |
74 |
74 |
74 |
81.4 |
81.4 |
81.4 |
7.4 |
|
Total investment fee |
$2,459 |
$3,415 |
$5,874 |
$2,090 |
$2,903 |
$4,993 |
-$881 |
|
Asset allocation |
|
|
|
|
|
|
|
|
Divergence from risk profile (Growth assets) |
-10.0% |
-15.0% |
-12.5% |
2.0% |
3.0% |
2.5% |
-10.0% |
|
Divergence from risk profile (Defensive assets) |
10.0% |
15.0% |
12.5% |
-2.0% |
-3.0% |
-2.5% |
10.0% |
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