Changing Landscape of Retirement #2 – Gayle McKew – Transcript

Episode details

SUMMARY KEYWORDS

people, clients, conversation, retirement, pay, months, money, strategy, literally, explained, understanding, complexities, income, transition, financial planner, portfolio, fortnightly, business, inheritance, planner

SPEAKERS

Gayle McKew, Fraser Jack

 

Fraser Jack 

Welcome to the x y advisor podcast, a global community of financial advisors sharing and learning with one another to drive the positive evolution of financial advice. To get involved, go to x y advisor.com. Or simply download the x y advisor.

 

 

This podcast is proudly brought to you by challenger at challenger, we want to help you ensure that your retiree clients can meet their retirement needs today and tomorrow. To access thought leadership insights and tips on retirement planning for your clients head on over to challenger.com.au forward slash x y.

 

Fraser Jack 

Welcome back to the x y advisor podcast. My name is Fraser Jack. And today we are talking all things around the changing landscape of retirement. lucky enough to be joined by gamma cue. Welcome.

 

Gayle McKew 

Thank you for having me. It’s a pleasure to be

 

Fraser Jack 

very welcome. Now I do want to give the listeners a quick overview of you and your business at the moment.

 

Gayle McKew 

So my focus is predominantly on helping retirees or those just five years prior to retirement right through to dealing with aged care at the other end. It’s been a speciality it was actually something caused the Aged Care side of it was caused by my own family’s personal need. And the age sorry, the retirement stuff was because I started as a planner at foster in New South Wales. And that was, gosh, Sydney’s retirement capital after people sold in Sydney then move to the north coast of New South Wales. And that’s what I cut my teeth on. So I’ve been doing retirement planning for too many years to count.

 

Fraser Jack 

It’s funny how Foster’s no it is that retirement villages that

 

Gayle McKew 

Australia used to be called God’s waiting room now. It’s sweet. It is God’s waiting room.

 

Fraser Jack 

All right, okay, it’s moved, that people have asked to be very happy to hear that. That guy, we are talking all things, you know, the the changing landscape and retirement. And obviously there is there’s a whole lot of different topics we can cover here. Probably one of the things I’ll hone in first with you is you’ve done a lot of work in the space of gender and gender inequality around women in retirement, in fact, you’ve written books on the subject. But let’s let’s start, let’s start here, I guess, you know, there’s obviously so many risks involved. For women in retirement, let’s let’s start in the space.

 

Gayle McKew 

So when I was doing a little bit of research, relatively recently, not for my book, but for another project that I’m working on, it actually is that women who are 55 plus that demographic are the highest at risk people of being homeless. And that’s not just in retirement, and it’s not necessarily homeless, the way we see thinking people living on the street, they may be living in their car, they may be couchsurfing, they might be house sitting. And to be honest, there’s a lot of people that are doing it. And they are hidden, because effectively, they have a roof over their head, whether it be a car roof or somebody else’s roof, they have a roof. And that means that those people don’t necessarily have the capacity to provide themselves with a secure home abode.

 

Fraser Jack 

This is a horrific stat, isn’t it? Like just the thought of you know, becoming homeless is enough to Polly Brock, anybody? But where is this coming from? And where are we seeing and how do we fix it?

 

Gayle McKew 

Well, part of it’s caused by failing relationships, and and also the fact that there’s a massive difference in pays even now for women in comparison to men. It’s anything up to 20%, depending upon the industry that you’re in, that women will be paid less than a male counterpart. In fact, I remember when I was managing a practice at one point that the sales guys expected to be paid more than I was and I had a full client load and managing a chain stuff. So they’re going well why should we pay more than her because we’re doing sales? And I’m like, it’s not about that, guys. It’s about skill set.

 

Fraser Jack 

Yeah. And so this is also the flower effect, I guess from the the difference in balances of superannuation funds.

 

Gayle McKew 

Oh, it is it’s a massive difference because But not only that, this women take time out whether it be to have children, or they get to the other end of the scale, and they’re pushing another set of wheels instead of stroller they’re pushing wheelchairs or helping people with really walkers. And mainly it is from my experience. It’s the woman who stops work or reduces her work from being full time to part time to accommodate the care needs of the family. Whether The younger generation, the older generation, or even grandma stopping work to look after, or reducing her work hours to look after her grandchildren, so that her daughter can go and earn an income.

 

Fraser Jack 

Yeah, okay, so so some of this, some of this homelessness could also be the concept of, as you said, but but people or grandparents moving back in and being supported by other family members

 

Gayle McKew 

to a degree, but what I find with that is, there’s often an expectation, if there has been a house that mom and dad owned, and mom and dad’s relationship has broken up, there’s not enough left after that split, to actually allow either one of them to necessarily go and buy something for themselves to provide security. So then there’s often then somebody goes, Oh, hang on, mommy can come and live with me, and she can put some money into the house that we’ve got. So then if if it’s not done properly, with either a live tenancy agreement, or a loan agreement, then if mum falls out with the child and their partners, then chances are they walk away with nothing.

 

Fraser Jack 

Yeah, there’s obviously a fairly risky space when it comes to combining incomes and properties and living together and granny flats and all those types of things.

 

Gayle McKew 

So yeah, there’s a lot of risks that that is hidden, but it’s hidden in plain sight. And most people don’t ever, ever recognize it till they’re impacted by it.

 

Fraser Jack 

Yeah, this is a really interesting part of it. So as you mentioned, hidden in plain sight. And I guess there would, there would be a lot of fear and anxiety around this that may not come to the conversation immediately.

 

Gayle McKew 

Oh, totally, there’s a lot of embarrassment actually about it as well, because people sort of go, I’ve got this over here, as in, I want to give the impression that I’ve got this, but they really don’t. And they don’t want to let you know what they don’t have. And as I keep saying to people, doesn’t matter what you’ve got, where we are is your starting point. And if we don’t know what your starting point is, transparently, we literally have no capacity to help you the way you need to be helped. The best way.

 

Fraser Jack 

There’s also a conversation around reaching out for help or not reaching out for help when it comes to that. Maybe I don’t understand what the value of advice could be if I don’t have very much,

 

Gayle McKew 

totally totally because realistically, regardless of where you’re starting, understanding the power of advice, it’s not really that advice is me saying, oh, here, let me take your money. Let me put it in product A, it’s actually more about me going. Tell me about you. And I’ll give you an example of this. I had a lovely woman around two years ago, she was around 5859. At the time, she was a recovering breast cancer person. She just had a double mastectomy, and she was going through all the chemo stuff. And she came in and she said to me, Gail, I hope you can help me and I went, why is that my love? And she said, I’ve spoken to two male financial planners, they both threw their hands up in the air and said, there’s nothing that I can help you with. And I went Okay, so let’s talk just a lot. Is it okay, if I write some rough notes, and I’ll ask you some questions later. And it turned out that her biggest wish was for security, she hadn’t enough money to buy a house outright, we could actually then move some money around and put it into superannuation as a product as an example, to effectively shelter it from Centrelink testing. Now, the reason that was done, but she was needing the financial support of a disability support pension, and the discounts that that would give her in gathering in regard to her medical treatments. So simply by listening to her, I could use something that would allow her peace of mind and capacity to have her asset and her lifestyle. Last time I went to see her, which was only about six weeks ago, she’s in great health because this is no longer stressed to the eyeballs.

 

Fraser Jack 

Yeah, the the head plays a big part in this conversation and in the emotion. Well, you know, there’s the hidden the heart isn’t the I often think of that. And you mentioned the word power of advice before which I love that term. By the way, thank you for saying that. The power of a device around reducing that uncertainty reducing the risks. And then there’s the financial strategies. And so a big part of this is emotional, you know, feeling more certain and knowing where we are versus the financial side of it.

 

Gayle McKew 

Oh, it’s an incredible thing because for most people, for we have a value system. I don’t know whether you’re aware but and the listeners may not be but everyone has a value system. And it depends on where security or flexibility or you know, freedom where they fit in your value system as to what’s going to be important for you. And as an advisor, we have to adapt to an individual’s value system. It may not be my value system, but I have to work with it. An external value system that belongs to the client, so that I can help them feel whatever they need, whether it be to have a degree of certainty, or to have a secure home, whatever their requirement is, that’s part of my job. And I see that as the biggest part of my job, rather than going, Hey, here’s a product. Yep. Here’s a strategy, strategy and a solution. And then the product, which used to be when I first started planning that used to be like, Oh, we’ve got this many things going on. It’s now also it’s almost like a byproduct of the strategy and the advice.

 

Fraser Jack 

Yeah, certainly isn’t in, you’re absolutely right. You know, in the past distribution came from product providers, and we were all asked to, you know, we have we have these products called superannuation products, and they’re they amazing, they provide some great benefits, and they go and distribute them and find, find people with the need. Now it’s the opposite. It’s the people finding, finding the people that, you know, helping them solve their needs with strategies. And then finally, finally, just on this, just on this concept of emotional side of it, because it’s uncertainty, there’s risk. But one of the things we’ve spoken about in the past is around the loss of identity or understanding the client’s identity. How do you see that playing into this?

 

Gayle McKew 

Oh, gosh, I have had many conversations with my clients over time where they’re being long term employees, or they’re being long term professional or long term business owners. So that instead of having them go cold turkey, for one of a better term, and say, I’m retiring on the first of July, or I’m retiring as at the 30th of June, firstly, I usually go, please, can we not do the 30th of June because if there’s any final payments, it’s just going to get added to the rest of your taxable income. You know, some, let’s just play that with that message, the dates, but for me, mostly, it’s about the fact that some people identify with their occupation, they don’t identify as who they are, intrinsically. They go, Well, I’m, let’s say, I’m a financial planner, I’m a mother of three, the grandmother of one and a half, because once June, July, you know, I’m the business owner, but I don’t, I don’t, that’s not my identity. I’m a person who’s basically willing to take risks, I’m willing to do things outside the square, but I own my values. But most people are all attached to their occupation as such. So for those people, I think it’s a really important thing to instead of just stopping work, to transition from being a full time identity into something else. And in the past, I’ve actually said to people, Look, you’ve got a whole pile of long service leave. So you’re not financially impacted? How about we we consider the opportunity of blending working and taking leave? Yeah. And can you do that? Ask your HR people, most employers are not going to want to pay out a lump sum of all of your final entitlements, because that would be really bad for their cash flow. And they go, Oh, never thought of it like that. And the big sweetener on that is that if they take that leave, and they slowly transition from working maybe five days to three days, or five days to four, to three, to two to one to none, then they can get to a point where they go, Oh, I have all these other interests outside of being whatever their occupation was. And suddenly they can go, Oh, I am whatever they choose to be.

 

Fraser Jack 

Yep. So this becomes a financial transition, as well as an identity transition. Now. Now, it’s a very interesting point, you’re raised here, when it comes to say, a professional who’s always been known for this, you know, a doctor or whatever they might be, or an accountant or a lawyer. And then they no longer that they’re now a retired person. So as you mentioned, that conversation around values is really important. How do you have that conversation with somebody who’s has been known as as one thing for so long, and now has to transition that

 

Gayle McKew 

I’m going to be honest, you can’t always win on that transition, that conversation, that transition, that would be ideal, because in some instances, like, for example, a lot of planners on this, they’re self employed, there’s no capacity for us to be part time employed, because it costs the licensee or it costs so much to be licensed. And that’s a fixed fee. So you know, it doesn’t matter whether you work one day a week, or you work five days a week, that’s the fee. So in some issues, it’s or instances, it’s not particularly viable to do that. But if it’s somebody like a professional who can choose to work three days a week, or a teacher who can job share, for example, that’s a really great way to do it. But it’s all about having the conversation and going, what would you like and letting them tell you and then basically, coming back and going, so what if we did this instead, because it’s usually I find it’s the putting of the extra thought process into it. And having managed people, I’m very aware of some of the things that your HR department can do. So it means that if you can go and ask the right questions, you can potentially get an answer that will facilitate a gradual change. Yeah, this

 

Fraser Jack 

is a really interesting aspect of it for those for those clients who are employed. And going back to the HR department sort of in a to and fro conversation around what the options are.

 

Gayle McKew 

Yeah, it’s a really important factor. Because if you don’t ask the right questions, or you don’t even ask the question, in the first place, usually the HR people will tell you, because they like to show what they know, right? So it’s quite an important factor to just sort of go, I’m considering this, is it a possibility, put it as a question, and nine times out of 10, they’ll go, Oh, we can make that happen.

 

Fraser Jack 

But you’re also right, in the, with the opposite as well, when you say that, you know, if you don’t say anything, they’ll just give you the standard, what they put what most other people do,

 

Gayle McKew 

correct. And you know, most people who are retiring and just taking a lump sum are going to give you an example. It’s a person I know who had held a business for 14 years and nine months now for us, we know that there’s a 15 year old, right. And they got cranky pants on and said, That’s it, I’m done. And they had a bucket load of leaves that they could have used. But and this is a family member. And they just told me afterwards what they’re done. And I was like, oh, my goodness, you could have done this, this, this and this, and had a totally different outcome and pay no capital gains tax. However, now we’re in the process of having to use a strategy that will help minimize the damage, but it won’t take it away entirely.

 

Fraser Jack 

Yeah, it’s interesting, isn’t it a lot of the time? Well, that’s the problem. I think there’s so many complexities around our system that, you know, people don’t know what they don’t know. And often make decisions before seeking advice.

 

Gayle McKew 

And they make emotional spur of the moment decisions. And that’s one of the biggest issues. If you’re thinking about being cranky, and wanting to get out of your business. Or if you’re in partnership with somebody have invited out, go talk to your accountant or the financial planner, don’t just go, I’m done. Because it could be in that instance, it was three months, they could have been on leave. And it would have totally changed everything.

 

Fraser Jack 

Yep. So how do we within within the profession get that message out?

 

Gayle McKew 

Oh, gosh, um, I don’t think that there’s a really simple answer on this one. Because I don’t know about you. But since I left school, and I was 17, middle left school, and I’m 58. Now, all I’ve ever done is money. So I’ve done a background of banking and commercial lending and mortgage lending and financial planning. And I’ve worked in accountants offices, and I picked up a bucket load by osmosis. Simply because I’ve been in the industry, and I’ve gone I’ve had a need to go and find something out. Whereas I know, people who know about cars, and they know about computers. But I don’t know them because literally, I don’t know what I don’t know about that. So this is the problem. People don’t know what they don’t know.

 

Fraser Jack 

Yeah, you’re absolutely right in the complexities around it as such, where you it’s really hard to work out what the right questions are ask.

 

Gayle McKew 

Exactly. And until you you were faced with something like that. Sometimes it’s really a case of not knowing what to ask for to just go, I think I need to have a conversation with my accountant, before all my financial planner, before I make these types of decisions, because literally, I know people who sold their portfolios at the bottom of the GFC at a time, and I can see your eyes rolling. At a time when portfolio values have dropped by, you know, 50% plus. And the clients that I was working with at the time, I did have one lady sit opposite me and she was in absolute tears. She’s like, Gail, I want to sell everything. And I was like, no, we’re not going to sell the thing. I said because it was all siloed. And it was a gearing strategy. So you know, the house was with one place, there was a loan with it another provider, then there was a margin loan and an investment portfolio. So there were four different silos we were dealing with effectively. And I said to her, because you’re siloed you’re protected. And she was like, Oh, I didn’t know that. She said, I just thought it was all related to in the one big thing and I’m like, no, no. So, you know, it’s actually about having us explain what people have sometimes.

 

Fraser Jack 

You know, this is a big, big part of the conversation is that there is so much complexity and understanding that from most consumers point of view is difficult when there’s so many moving moving parts. So the jigsaw puzzle,

 

Gayle McKew 

well, I met with some clients yesterday, and we had a conversation and they said, this is so complex and I went, well, I understand your perspective of it. It’s really complex. And we were last year they sold house, we did some investing, created a strategy, that means that they’re not likely to ever have to pay tax for the remainder of their lives. But the point of that is, they said, there’s so many moving parts, and I went in their comment was, what happens if you’re not here to support us? And I went, this is for people in my occupation. This is a bog standard. I’m not saying the strategy, but it is exactly what it is. And you will be able to take this information to another planner, now look at and go, Oh, got it. know what that is? I said, so it’s more about the skill set that we have, rather than this is complex. This is too complex, because it’s not taking your money to the bank. And why can’t it in a term deposit? Yeah,

 

Fraser Jack 

yeah. Just Just on this understanding pace about the complexities and understanding from the planners point of view. But of course, now it needs to be in Hollywood, he should have been but really understood by the consumer and the client. And

 

Gayle McKew 

Oh, totally, totally. So

 

Fraser Jack 

how do we get that information across when they’re when it is complex? And how do we? How much time I guess to be spent on it, and how do we make it make that okay for the client?

 

Gayle McKew 

Well, I usually start off by saying to clients, I’m a great planner, I’m a really rubbish artist. And then I start drawing bad stick figures in boxes and lines in, people tend to get it when they can see it visually. And literally, I explained, I’ll use a bucket strategy, pension to clients yesterday, and I showed them in a pictorial sense of drawing my boxes and saying this is defensive. This is gross. And they went, Oh, Okay, got it. Thanks. And literally, they said on the other side of the table, both nodded, nodded, have smile on their face. And they got it now. Because for that, they literally were like, yeah, this is a bit complex. But when I explained it in a format that they could grasp, it was really simple. So this is for me, one of the factors is that I’ve drawn them some really bad pictures because cinema, rubbish artist, but it gets the story across, because when you write them in front of them, and you control them simply, then it means the concept is easier to accept.

 

Fraser Jack 

Yeah, I couldn’t agree more. There’s nothing. There’s nothing better than a few stick figures and a few diagrams to talk about something. Unfortunately, that’s not quite what our advice documents look like, though.

 

Gayle McKew 

No, they don’t. They were like reams of paper. And

 

Fraser Jack 

now, just on the concept of complexity, does that add an additional additional layer of fear to client?

 

Gayle McKew 

Yeah, it does, to some degree, it comes down to how well it’s explained and also diversification and how that’s explained. So I’m a weed, I often use the old analogy of a bike wheel with spokes and indicate that a spoke might be a company. And I know that I rode my bike many times from obviously kid with broken spokes, because I was a bit of a wild child. And the bike still work because the tire had integrity. And when you explain that to people like that, they go. Oh, yeah, that makes sense. And then we start talking about inside the the individual investment. And then the sector changes in how we work with when, when I was working sectors, I’m saying some people are more growth and volatility tolerant, and others are not. So it’s all about working within their comfort zone. And using plain language. It has to be, I wouldn’t say Simple English, but it has to be readily understood. You have to make it so that if people aren’t sure, they feel confident and comfortable enough to ask you the questions so that they can get the handle on what you’re trying to explain.

 

Fraser Jack 

Yes, I have to agree. I think every player in the country has got analogies that he used for explaining most of these concepts. Wouldn’t it be great to have a bank of all those analogies and just say, there you go, there’s 10 different ways of explaining that one thing. You’d be working with a lot of clients around the conversation around taking their money from a savings environment, or growth environment and then converting it to a conversation. Well, now you’re actually going to be spending or living on this money and the different mindsets around how they then you know, translate that from being a saving to a spending if you like,

 

Gayle McKew 

oh, okay, so that is a massive, hence being for a lot of people. Because all they’ve been taught to do is accumulate but nobody ever says that. When you get to retirement, that the intention behind superannuation, and all of those other things that you’ve accumulated is that they’re going to have to provide for your lifestyle when you’re no longer working. And a lot of them get really uncomfortable, incredibly uncomfortable. And they go, I don’t want my capital to go down. But if they go to the bank, and they’re going to pick up a point eight of a percent interest rate on a million dollars, which one client suggested that he could get? I was like, whew, that’s not even going to meet inflation. And then we’re going to take off the impact of tax on that anyway. All right. So then we started to talk about investing, to try and pace inflation and to try and protect the value of their investment against erosion. And he was, he was like, all guy, oh, no, I really don’t like this. I’m very uncomfortable. And his wife on the other side of the coin was like, cool, I got it. I’m really happy with this. So as a planner, we often deal with conflicting and contrasting emotions. So their portfolio is currently constructed with a little bit of what works for her and a little bit of what what works for him. They’re both sort, he’s slightly uncomfortable. And she’s like, Okay, this could be a little bit little bit more risky. And I’m like, yep, but this is the first four months, I need to be comfortable with this. So the first meeting, he was like, Oh, actually, that was our third meeting, when I presented to him the strategy and the investments and the focus. And he’s like, I don’t like this. And his wife’s gone, this is good, this will work. And he said, I’m going to trust her. That’s the wife. If she figured she understands it, we’re going to do it. And I literally spent three hours having conversations around how money would come in. And it wasn’t always going to be smooth. Because, for example, if there’s a share portfolio, he pays income twice a year, it doesn’t give you income every month. And he was expecting everything to pay income every month. And I’m going No, no, no, it’s we just have to work out a way that will get you through the first six months to 12 months to get your head around this. And when we sat down for three months review, he went, I’ve got it now. And I’m like, What do you think God telling me? And he said, I understand this thing called growth, and that it’s going to compensate for, in his words, what I’m taking out, and obviously, up. Cool. Tell me more. So when it came down to it, he actually explained to me, he’s been watching the value of the portfolio and the changes in the actual underlying investments. And it’s like, you know what, I’m actually comfortable with that now, and I’ve gone Oh, goodness, this was a man who had been a bank manager and said, I only want to have deposits.

 

Fraser Jack 

Here. Very interesting, isn’t it, there’s, you know, that transition of getting your head around something doesn’t always happen overnight, it can be a transition of some people get it straightaway and other people just takes a bit longer. And you just need to live it a little bit and feel it and see it before they

 

Gayle McKew 

know that transition of volatile volatility. My kids when they were young, they had managed funds held on behalf of them. And at one point, they used to measure their losses and gains in how much they paid $200 for a skateboard each the two younger ones. And they used to measure the losses and gains on a portfolio in terms of skateboards, once it could have bought a skateboard for for what that lost. And the other one said, given six months, and I reckon you’d made that skateboard back and got another one. And that’s exactly what happened.

 

Fraser Jack 

It’s a really good way of looking at it for people that are in that space. And any time. Yeah, and anyone who’s got kids or grandkids that want to think about that it’s a great concept, understanding what that person’s economy is at the time to be able to then translate conversation. Now, we’ve also talked a lot about that, you know, the trade off conversations that I you know, people have a lot when it comes to retiring. And, you know, when it comes to what that might look like, every time it might look like how do you sort of have those conversations with you?

 

Gayle McKew 

Oh, gosh, that can be really hard at times, because most people have an expectation that when they retire, they’re going to travel. And sorry, but COVID hit that. I have a few clients who are saying I expected to spend 20 grand on a trip overseas last year. And we’ve still got it because literally COVID happened and we can’t leave the country. But there’s also people who will go, you know, they might spend 60 or $70,000 a year on lifestyle at the moment. But if they’re going to spend 60 or $70,000 a year in retirement and suddenly their income has turned off, then we have to stop and think about Okay, let’s look at what your base requirements, what you might be willing to do less frequently, and even what you may be willing to give up. Now, there’s a lot of people that are not willing to give up too much to be absolutely honest. But in what You could maybe do is get them to think about whether they go from having a full foxtel thing that costs whatever it is a month to pay for view, you know, it might save them a couple 100 bucks a month, or they can get most of what they want by going and maybe getting a different subscription. So you know, asking them to just even shop around and look at whether their phone bill and your internet provider is going to be able to be done that something more cheaper through a different provider. Those things, people’s people are lazy about their habitual, we have habits and unless you are encouraged to look at those costs, most people never will. So that’s one of my things that I sort of say to the new gotta look at minimizing your, your, your base costs. And then we need to look at what what are you willing to trade off. And the trade off might be that instead of going overseas, every 12 months, you go overseas every two or three years, but you make it within your budget.

 

Fraser Jack 

So this probably brings up a great time of the conversation to talk about cash flow and how how you work with the clients around the you know, the changes in the cash flow and what they need to expect.

 

Gayle McKew 

Again, very challenging for some people, because I’ve been so used to having either a weekly or fortnightly income, some people get paid monthly, and they sort of go, What do you mean, some of these investments only pay income every six months? And reality of it is it’s a whole new mindset, because they’ve been so used to this security of things coming to them on a regular basis. So what we tend to do is say to people, all right, talk to me about what your minimum buffer is, I’m using buffer as a term, but what’s your safety net amount, and some people will go 10 grand, some people will go 20 grand, some people go 50, it just depends on the individual, because they’ve never done this before. So what we tend to do is say, All right, let’s work on the fact that you’re going to have a pool of money available to you, and you’re going to overtime, draw it down a little bit, before something comes in to compensate for it. How many people do you know use their cards automatically, they just have wherever they go. So they’re really keep an eye on their bank balance. And for some people that can be really dangerous. So what I have encouraged some people to do is go Alright, put what you’re prepared to spend every week or every month into a fortnight however you want to budget for yourself into an account, make that your spending account. And when that’s run out, stop, because you have to have another account that basically pays for your fixed living costs. And your fixed living costs are going to be things like your electricity, your rates, your brain, those types of things. But we still have this pool of money that’s there. And it’s going to be topped up and depleted at different times. And the first six months is generally the hardest because people have fear about not having a regular income stream. And in a lot of instances, when I’m setting up retirement income streams, I make sure that there’s at least a monthly payment, even though at times you could extend that. But then other people go I need it fortnightly because in their head they can only budget fortnightly.

 

Fraser Jack 

Yep, absolutely. So that’s a really good point. Understanding that and making sure that you get across that sort of at the beginning, I guess, of someone’s retirement journey. And then and then once again, become become a new learned behavior, they get to improve on that

 

Gayle McKew 

well, particularly if they’ve been say, in receipt of a full pension, and then all of a sudden they’ve received an inheritance. And I’ve had a few people do that. And they’ve actually lost their centerlink entitlements. And for them, it’s basically it’s earth shattering because for them, one couple had been retired for 20 years, no, not 2015 years. And all of a sudden, they inherited quite a large sum of money. Between the two of them, it was into that seven figure range. And lo and behold, that meant that they lost their centerlink entitlements. And they were just devastated. Because for 15 years, they don’t that security of fortnightly income and they didn’t know how they’re going to cope. So I had to sit down and have that conversation about we can replace it. But instead of replacing your income on a fortnightly basis, we’ll replace it on a monthly basis. Is that okay with you? I’m not sure. And then we had that conversation about having that pool of money. That was the safety net. And when they could see it coming in after the first three months. I was like, Oh, yeah, I got it now. So it’s all about changing managing that and transitioning that change in their expectations. You To the new reality,

 

Fraser Jack 

yeah, now that the concept around sudden wealth or you know, even accidental wealth, but probably probably more around this inheritance part of it, how do you see that affecting people?

 

Gayle McKew 

Some people literally, if it’s if it’s like a lotto when you basically can see that will dissipate. I remember years ago, at 85 year old lady in the town, we used to live in one $2 million, and the quarter of family appeared from nowhere. And they all had their hands out. And then they had the expectation that they should be able to give all that and that the lady would still keep her Central and pension. So I have to explain that the harsh reality and say no, that that won’t work. But for people who’ve inherited, there’s actually quite often guilt, because they’ve lost the emotional connection levels that parent, and that inheritance represents for them, my mom or my dad are no longer here. So there’s quite an emotional thing to it. And that then throws a whole different slant on how we plan because we have the need to respect the source of the the actual inheritance of the income, that was the capital that’s come to them. And then we still have to do the education piece and go, this is how we’re now going to focus your life. And then they go, Oh, God, I can’t spend too much money, because I need to leave something to my children. So you’ve got the money coming in with some guilt. I need to live. But hang on, I’m not gonna live too well, because I’ve gone leave money for my kids.

 

Fraser Jack 

It is a guilt a really interesting part, isn’t it? Because it does, it plays a factor of equations around you know, what, if your parent was sitting here today, what would they say to you about this money? Or what would they tell you to spend it but they tell you to go easy? I guess that sort of gives you an indication of what they might be thinking?

 

Gayle McKew 

Yes, it does. But it’s it. Every person has a different reaction. Some people are like, Oh, I have had one person go. Mom’s about to die, I’m gonna get this much. What are we gonna do with it? They’ll just very businesslike and then others are like, there’ll be in tears, because literally, they’re grieving. Yeah. So you’ve got that contrast between, this is what’s happened. And I’m okay with it versus the other side of the coin of guilt.

 

Fraser Jack 

Now, now that also a lot of people sort of have this wealth and property, if you like that sort of maybe bought something years ago, or was or you know, and all of a sudden, it’s worth a lot of money. And we’ve had, you know, obviously a fairly steep rise in the property market over the last sort of 1015 years. You see a lot of that where people are sort of then have property but don’t have as, you know, cash flow or that, although trying to work out how to sell property.

 

Gayle McKew 

Well, I helped a family recently, and they had sold a house that they’d held for over 10 years. And we could do some magic and turn it into something that was going to be tax free. But the biggest part that this really hurts is people who are moving to HQ, because there are effectively three different contracts for entry to aged care. And there’s a deemed amount effectively for what your house will be worth, regardless of whether it’s a little shack by the beach, or, sorry, a little shack by the beach is probably worth like 3 million bucks now, versus something that might be in the country that might really envy worth $150,000. So there’s that same deem value whether we’re talking a mansion or you know, something far less salubrious. So those people who say, bought in Sydney, or on the coast somewhere years ago, and paid next to nothing for it, and they might have spent $50,000 on a house, but it might be worth close to a million or more. So those people have often got 10 grand in the bank, because they’re struggling to pay their rates and all their other expenses. But they’ve got this massive asset. And they the government says yeah, we’re not going to count that against you from an aged care perspective. And it makes it very confronting for families.

 

Fraser Jack 

Again, you know, without time to play, and that makes it very tricky.

 

Gayle McKew 

And 99% of the time when people move to aged care, it’s because somebody is have fall, or it’s an emergency, it’s not something that you can play in 612 months down the track. It’s just like thing done. Now I need to move to aged care and sought this money out. Thanks.

 

Fraser Jack 

Yeah, so in a way you need you do need to have those. Those conversations early though,

 

Gayle McKew 

you can never really have them at the right time because the person who’s needing care their 99% of the time, in denial about the need for care, and they will fight tooth and nail to keep their independence. So There’s no right time phrase of this. It’s just when you have to have that conversation.

 

Fraser Jack 

Yeah, fair enough. Now, I wanted to talk just quickly about technology in the landscape of technology. That’s, that’s coming into play when it comes to people of all ages of retirement, obviously, most of them, I would say, not coming from an upbringing of technology, let’s just say, and, and then now having to cope with new changes and what that might bring in and the uncertainty that comes with it?

 

Gayle McKew 

Well, I’ve had recently two instances, one where I, we set up to new investment with a provider, they got an email from that provider, and they basically said to each other, do you worry about this? And they went, they looked at each other, or not. So the next thing I know, the emails ended up in a junk file. And I met with them. And I said to them, did you get an email from this particular provider? And they went, yeah, is that important? I’m like, here, where is it and they went junk, and we pull it out, we have to actually action that. So there’s a lot of fear about spam, and somebody’s taking their identity and doing something wrong. And then there’s other people who literally, and those two were actually it savvy, they because it savvy that and they hadn’t, they hadn’t read my email yet. That said, you will be getting an email from this provider, they just got up, this is rubbish, pretty much in the junk thing. But the other side of the coin is that I had clients recently, and they’re so fearful, it went in the job thing, and then they went, we don’t know how to do this scale. So we actually had to sit down together, and I show them how to set it up on their phone and how to log in and do those types of things. So there’s a whole gap in what provider expectations are. And we whether we’re talking government organizations that go, Hey, you need to have a mygov account, or you need to do whatever. A lot of our clients are the water seniors don’t have computers, they might have a smartphone, but they still don’t understand how to use a smartphone, other than really how to maybe check an email, how to take a photo and make a phone call. Oh, it’s probably in Facebook. Just sign

 

Fraser Jack 

up on the grandkids. That’s it. Yeah. Or work out how to sell something on the marketplace. Fantastic. Thanks for chatting all about all the different things around retirement today. Really appreciate it. If someone wanted to continue this conversation, what would be the best way to get hold of you?

 

Gayle McKew 

Well, my, my business is called prosperity planning partners. We’re based on the Gold Coast. And I have clients pretty much in every state of Australia. So it’s not like you have to be Gold Coast centric. In fact, I’ve got some NWA. South Australia, Northern Territory. Yeah, actually every state but ICT, right? And that’s the territory. And you can find me at prosperity planning.com.au or you can just email me at Gale at prosperity planning.com.

 

Fraser Jack 

Wonderful. Thank you so much, guys. I really appreciate you coming on and sharing today.

 

Gayle McKew 

You’re welcome and loved every minute of it. Thanks for having me.

 

Fraser Jack 

Well, there you have it, another episode of the Expert Advisor podcast. I’m Fraser and I’m joined by Emily. Hey, hey, Fraser, how

 

 

you doing?

 

Fraser Jack 

I’m tremendous. Thank you for asking. And we had to do some shout outs, which is a really cool part of our week.

 

 

Amazing. Yes, let’s do it. So big shout out to 2x y legends, Charles Blake and Timothy Reid, both smart tech extraordinary, who have joined forces to create a high touch high value eight week program to help advice firms who are serious about improving their technology and efficiency. Now the cool thing about this program is that they are hosting it exclusively on x y, which is really exciting. And their goal is to help advice firms achieve a minimum target of 20% or more in productivity gains, which for the layperson really just means getting back hundreds of hours across your business to reinvest into those value adding and growth driving activities. So anything that champions efficiency and business growth and understanding and moving the needle on technology in your business is awesome. And to be able to exclusively host them on x y is extra special as well. So amazing staff, great to have you guys on board and looking forward to seeing results and outcomes that come off the back of the advisors that go through this program.

 

Fraser Jack 

Brilliant. Thank you, Emma. Way to go Charles Nice work. And Tim, you know, like this is an incredible program to my favorite things efficiency and effectiveness whilst using technology. And not only that, they’re using a really efficient and effective platform for running their course. So if you’ve got a course or a program that you want to bring to life, then reach out to me and have a think about whether you might want to put it on the x y platform.