Top questions posed by advisers revealed

According to BT, its technical services team has been fielding an increasing amount of queries from advisers during the July–September quarter, spanning a range of burning topics including client separations, superannuation, and the indexation of pension thresholds.

Among the most frequently posed questions to BT’s technical hotline are those related to separations.

Namely, while the total number of divorces in Australia during 2021 skyrocketed to 56,244, the highest number recorded since 1976, advisers increasingly encountered an interesting ethical dilemma – how to serve clients that are separating.

Tim Howard, a technical consultant at BT, noted that similar to legal advice, in some cases, it is more appropriate or even necessary for each individual to seek their own independent financial advice.

“The next challenge for the adviser is deciding who, if any, to keep as a client, and approaching how they end a client relationship with empathy and sensitivity,” he explained.

Ultimately, BT stressed that advisers must always be guided by ethical principles and their obligations under the Financial Planners and Advisers Code of Ethics 2019 when faced with a potential conflict of interest, even if advice practices may already have specific policies that pertain to client separation.

Also top of mind for advisers are carry forward concessional contributions following the July 2023 changes that have meant that clients can look back and carry forward their unused concessional contributions for the previous five financial years.

“As the measure started from 1 July 2018, an individual could only look back to the ‘start’ and carry forward one previous year from FY2020, then two years from FY2021 and so on,” said Mr Howard.

He noted that advisers may wish to remind their clients that unused cap amounts are available for five years and expire after this time.

Moreover, BT has also observed an increased demand from advisers for its non-concessional contribution (NCC) calculator, which assists cross-checking a client’s eligibility to bring forward an NCC.

“The calculation can be complicated,” said Mr Howard.

“Advisers are asking questions on calculations more frequently, especially since the work test no longer applies for these types of contributions. They are confirming the ins and outs and using tools such as our handy NCC calculator.”

Questions from advisers have also touched on the indexation of pension thresholds.

Namely, indexation of social security payments, including age pension, disability support pension, and carer payment, provides relief to those affected by the rising cost of living, with rates increasing on 20 March and 20 September each year, while means testing thresholds have also changed as of 1 July 2023, potentially resulting in higher payments for eligible recipients.

Mr Howard commented: “Receiving social security income support such as the age pension – even if it’s a small rate of payment – may give a client several ancillary medical and pharmaceutical benefits via the pensioner concession card, helping to ease cost-of-living pressures.”

“Clients may also be able to receive a range of state government rebates,” he added.

BT further pointed out that advisers with clients that are in self-managed super funds (SMSF) have been asking questions on the implications of winding up SMSFs, such as transferring SMSF assets to public offer funds or to a member.

“SMSFs may need to be wound up for many reasons, such as a relationship breakdown, and it’s good for trustees to be across the exit strategy and potential costs involved as their circumstances change,” said Mr Howard.

Ultimately, BT noted that the changing economic environment has also altered the type of questions advisers are bringing to its technical team – a team that fields some 2,000 adviser questions quarterly.