Statement of Advice

Appendix Information





There are four basic asset classes that you can invest in:

  • Cash
  • Fixed Interest
  • Property
  • Equities (Shares)

These assets classes are available both in Australia and overseas.

Fund managers, responsible entities and trustees of superannuation funds can invest in cash, fixed interest, property or shares or a combination of two or more of these classes. They may label them as Capital Guaranteed, Capital Stable, Balanced, Diversified, Growth and Managed.



Cash investments are investments where the funds are typically “lent” to Australian Government bodies, banks (including building societies and credit unions) and companies – they are borrowers of funds. These “borrowers” pay an interest income that usually rises and falls over time in line with short-term interest rates. Cash is a very low risk investment and pays an investment return in the form of interest.

Examples of cash investments include:

  • Cash Bank Account
  • Cash Managed Trusts
  • Bank Bills
  • Treasury Notes

Advantages of cash investments:

  • They can be redeemed at short notice
  • They are generally very stable investments where the capital invested is unlikely to be affected by market and economic conditions; and
  • Cash is appropriate for investors wishing to achieve short-term investing and savings goals

Disadvantages of cash investments:

  • Interest is payable in line with short-term interest rates – therefore if interest rates are low, then the yield will normally be low also
  • All interest earned is potentially taxable at your marginal tax rate; and
  • Inflation usually erodes the value of the investment


Fixed Interest

Fixed Interest investments are also known as debt securities and they have a fixed rate of interest payable. Typically, an investor lends their money to an organisation, such as a bank, in return for a fixed return to be payable set at a future date. Fixed interest investments tend to be low to medium risk for Australian fixed interest and medium to high risk for international fixed interest (known as international bonds).

Examples of Fixed Interest Investments include:

  • Term Deposits
  • Commonwealth government bonds and debentures
  • Semi government bonds and debentures
  • Corporate bonds and debentures; and
  • First mortgage managed funds

Term Deposits
Are deposits with a bank, building society or credit union for a specified period of time and in return, the investor receives a fixed rate of interest for the duration of the deposit. The rate is defined prior to the deposit being made and is fixed for the duration of the deposit. Term deposits can range from one month to five years in duration.

Are issued by government and semi-government bodies in Australia and overseas. You can invest in a bond from one to thirty years in duration and at maturity, the borrower will return the money to the investor plus interest.

Mortgage Funds
Lend out investor’s funds to institutional or large commercial borrowers who can provide acceptable security for the loan. It is WealthSure’s policy that we only allow mortgage funds that are backed by first mortgage security on to our Approved Product List (“APL”). The income derived from a mortgage fund is usually fully taxable at the investor’s marginal tax rate.

Mortgage funds normally lend up to 66% of sworn valuation of property and in some cases may lend above 66% by purchasing mortgage insurance. They will also maintain some funds in short term money market instruments to meet withdrawals. There is not usually an entry fee to these trusts but there is often an exit fee in the early years of an investment.

Mortgage trusts can be a sound source of income as part of an investment portfolio. Income can be paid monthly, quarterly, half yearly or annually depending on the rules of each trust. In a market where interest rates are falling they can maintain higher rates of interest than other investments for some years. Conversely in a rising market they may produce lower rates. Current market conditions should therefore be considered when selecting this type of investment.

Risk level is higher than most other fixed interest investments but is commensurate with the returns:

Advantages of fixed interest investments include:

  • They are relatively easy to redeem, giving the investor liquidity
  • They provide the investor with a certain income amount over the term of the deposit or investment; and
  • They are low risk investments and the risk of losing capital is minimal

Disadvantages of fixed interest investments:

  • If variable interest rise after you purchase the investment, then you have forgone the opportunity of earning higher interest rates in the market. This effectively reduces the face value of the investment
  • International fixed interest is affected by currency fluctuations; and
  • A fixed interest investment is locked in for the full term of the investment otherwise there are penalties for an early redemption



There are two ways a manager can invest in property. They can either own it directly or they can invest in listed property trusts. The term listed refers to listing on the stock exchange.

These property trusts invest directly in property (either commercial or domestic) and investors purchase units in the property trust. It is WealthSure’s policy to not approve property trusts that invest predominantly in property development.

Listed Property Trusts
Are considered by many to be an equity investment as the trust itself is listed on the stock exchange and investors purchase shares in the Trust. The shares can be traded on the stock exchange, and are therefore subject to fluctuating market sentiment. Whilst “listed property” trusts have an equity-based structure, the underlying asset of this trust is property which is generally less volatile than the equity market.

Listed property trusts will normally produce quite good levels of income, which is reasonably tax effective, together with reasonable levels of capital gain over time. A major benefit of a listed property trust is liquidity, as the shares can be sold to a ready market at any time.

Managers who invest in listed funds can give investors the benefit of a spread of property throughout the market and this can be appropriate in a portfolio, especially for the smaller investor.

Unlisted Property
Investments are now subject to stringent rules, which in turn make them a relatively illiquid investment with long redemption periods. Provided this suits the investor and it is a smaller part of their portfolio this may be an appropriate form of property investment.


Equities / Shares

Fund managers use investor funds to invest in shares listed on the stock exchanges of the world. The primary objective with share investment is capital growth through the value of the share, but they also can pay income in the form of dividends. Dividends are the company’s distribution of a portion of its profits payable to shareholders. Dividend income from investment in Australian companies can also have significant tax benefits attached under the dividend imputation system.

Shares are generally medium to high-risk investments. You are relying on the company to perform well and grow over time, whilst at the same time being subject to market fluctuations and economic and regulatory change. Given the level of risk associated with share investments, it is recommended that most investors invest for the medium to long term in order to smooth out volatility.

Different managers may invest principally in all or specific market areas:

  • Aust. Industrial
  • Aust. Resource
  • Aust. Emerging Co.
  • International Shares
  • Overseas’ Industries
  • Overseas’ Regions
  • Specific Countries

Additionally the portfolio may be weighted towards more or less speculative stocks, or may be designed for income rather than capital growth or vice versa. Some fund managers invest in Australian shares that are fully franked with the aim of producing a tax effective income stream coupled with reasonable growth. International managers may hedge the currency risk or may not. They may also invest around the globe or only in specific countries or regions.

Advantages of equity Investments:

  • They provide for good long-term capital growth and performance through careful selection and consideration
  • Most Australian shares have some form of franking credit attached. This means that the company has already paid tax on the income. And this is passed on to the investor in the form of a tax credit; and
  • Shares can be traded on the stock exchange very easily. By investing in shares, an investor is able to own small parcels of many different companies, thereby diversifying the investment portfolio

Disadvantages of equity Investments:

  • The value of share can fluctuate at a high rate in the short-term
  • Dividends are not guaranteed. Company directors are not obliged to declare a dividend payment; and
  • Ordinary shareholders are usually towards the bottom of the list for repayment of capital when a company winds up or liquidates

* General Advice Warning – End of Page.



Important Components


Stepped Vs. Level Premiums                        (All Policies)

This will help you to maintain affordability for your cover in the short term. Furthermore due to your age the difference between a stepped and level premium is minimal over the longer term and therefore stepped premiums provide that little more flexibility.

Premiums remain at a similar level for the life of the policy, however, the initial cost is much higher than stepped premiums and therefore have not been recommended. In addition, you are apprehensive about insurance and require the control to terminate the policy each year, without financial penalty.

Any vs. Own Occupation Definitions          (Total & Permanent Disablement)

Any Occupation
As defined by some insurers, you have suffered a sickness or injury and you have been absent from and unable to work because of the sickness or injury for a continuous period of at least 6 consecutive months; and in the insurer’s opinion, after consideration of medical and any other evidence, that you are incapacitated to such an extent that you are unlikely ever to be able to work again in any occupation for which you are reasonably suited by education, training or experience which would pay remuneration at a rate greater than 25% of your earnings.

Own Occupation
As defined by some insurers (Not available under Superannuation), you have suffered a sickness or injury; and have been absent from and unable to work because of the sickness or injury for a continuous period of at least 6 consecutive months; and in the insurer’s opinion, after consideration of medical and any other evidence, that you are incapacitated to such an extent that you are unlikely ever to be able to work again in the occupation in which you were last engaged before becoming unable to work.

Indemnity vs. Agreed Value                           (Income Protection)

It is imperative that your Income Protection will supplement your income at your current income values, as all calculations within this statement of advised, has been assessed at this amount.

Agreed Value
Under the Agreed Value, the monthly amount insured is the Monthly amount you are paid and is guaranteed not to reduce, irrespective of future changes to your income. Proof of your annual income must be provided, prior to the commencement of the policy.

Indemnity Cover
Under the Indemnity benefit policy, the Life Insured will only be entitled to the lesser of the two monthly benefits: * Monthly Benefit shown in the Policy Schedule – 75% of the life insured’s – Pre-claim earnings over the previous 12 months prior to the date of claim.


Tax on Total & Permanent Disablement (TPD)

How to avoid or allow for tax if TPD is owned by Super?

Taxation of TPD policies owned by Superannuation
Many people hold their TPD insurance covers in their superannuation account and don’t realise that a claim payment may be taxed if it is paid to them from super. Usually TPD cover is held so that if total & permanent disablement occurs, a lump sum could be used to repay debt or fund lifestyle and medical needs, therefore taking the tax liability into account is important when calculating the required sum insured.

How it works?
When a TPD payment is made from superannuation, there is a tax free disability segment called the ‘Super Disability Benefit’ which is not subject to tax.

The calculation of this tax free component depends on the time remaining between when the insured becomes disabled and their intended retirement (assumed to be age 65). The remainder will be allocated to the taxable component and taxed at normal super withdrawal rates.

  • If a person suffers a TPD event prior to their preservation age (depending on their year of birth), the taxable portion of the benefit will be taxed at 22% (including 2% Medicare Levy) if drawn as a lump sum.
  • If a person suffers a TPD event above their preservation age but under 59, the tax free disability segment plus the first $165,000 of the taxable component will be tax free and the remaining portion will be taxed at 17% (including 2% Medicare Levy).
  • For those over 60, the benefit will be paid completely tax free.

The Super Disability Benefit is calculated as follows:

A x B


where: A = the amount of the benefit

B = number of days from date of termination to ‘last retirement date’

C = total number of days from start of eligible service period to ‘last retirement date’

John’s Date of Birth is 1 January 1970. His Earliest Service Date is 1 January 1991 (age 21) and his normal retirement date is 1 January 2035 (age 65). John has TPD insurance owned by his Superannuation Fund of $1,000,000.

John suffered an injury and was deemed totally and permanently disabled on 30 June 2015.
He is 45 years old. Since John was born after 1 July 1964, his preservation age is 60.
If John elects to receive a TPD benefit as a lump sum, the tax free component will be:

TPD Sum Insured x number of days from date of termination to last retirement date
Total number of days from start of eligible service period to last retirement date

$1,000,000 x 7,125 days
16,071 days

= $443,345

John will receive $443,345 of his TPD benefit completely tax free.

However, tax is payable at 22% on the remaining benefit of $556,655 which equates to $122,464.

The total net benefit payable to John would be reduced to $877,536. If he expected or needed to receive $1,000,000 then a problem exists.

For the purpose of this example, calculations have been done in whole years of 365 days and no leap years have been taken into account.

There are two main ways of dealing with this problem:

  • Increase the sum insured by the amount of tax payable, and in turn the premium proportionately.
  • Hold the TPD cover in a new superannuation fund account without rolling over existing superannuation to it, so that the new policy start date becomes the Earliest Service Date for tax calculation purposes (most insurance companies have a non-investment superannuation facility that can be used for this). This way you get the benefits of holding the TPD in super, but reduce the tax.

Note, there are other options that include taking the benefit all or partially as a pension, but there are still tax implications involved if you are under age 60 and therefore the net amount received may still be expectantly insufficient.

When you calculate the amount of TPD insurance cover you need, it is important to be aware of the tax that may apply when owned by super and either allow for it, or structure the ownership so it can be reduced or avoided.

* General Advice Warning – End of Page.



Keyman Insurance is generally owned by a company or business to protect a key employee. In the event of the key member becoming critically ill, permanently incapicated, or dies, the policy will provide a lump sum benefit that is generally tax free, which can minimise the impact of the loss of a key employee.

Tax Treatment of a Keyman Insurance Benefit

As specified in Section 51 of the Income Tax Assessment Act, the following applies:

  • The benefit is not taxable if involves a life insurance policy and the benefit is paid to the original beneficiary of the policy.
  • The benefit may be taxable if it involves a Life/Critical Illness/TPD policy and the benefit is paid to a trust or company.
  • The benefit is generally not taxable if it involves any policy and the benefit is paid to the life insured, their spouse or a defined relative.

Tax-deductibility of a Keyman Insurance Policy

As specified in Section 51 of the Income Tax Assessment Act, the following applies:

  • If a Keyman Insurance policy is established for capital purposes such as repaying debt, the insurance premium is not tax-deductible and the benefit is generally paid as a tax-free lump sum to the original beneficiary of the policy. Capital Gains Tax (CGT) may be payable on the benefit if it is paid to a company or trust for a TPD or Critical Illness event.
  • If a Keyman Insurance policy is established for revenue purposes such as replacing a loss of income, the insurance premium is generally tax-deductible and the benefit is assessable and taxed at the applicable tax rate. Capital Gains Tax (CGT) may be payable on the benefit if it is not paid to the original beneficiary of the policy for Life Cover and the recipient of the proceeds acquired the benefit for consideration, or if the benefit is not paid to the life insured, their spouse or a defined relative for a TPD or Critical Illness event.

Important Information:

  • Bdm Financial Services may be able to assist you in addressing the ownership structures and purpose of a Keyman Insurance Policy.
  • This technical article is of a general nature only and should not be construed as financial advice or as a basis for making any financial investment, insurance or other decision.
  • Tax information provided in this technical article is intended as a guide only and is based on our general understanding of taxation laws. It is recommend that you seek specialist tax advice from a registered Tax Agent or qualified Accountant.

* General Advice Warning – End of Page.



Every Good Partnership Needs Backup!

It really does seem that the insurance options available to you are endless and, as a result, it can be pretty easy to just dismiss those you are less familiar with as unnecessary.

However, when you run your own business, it’s important to do your due diligence where insurance is concerned as much as you would with anything else related to your business. So, in that spirit, let’s have a closer look at partnership protection insurance so that you can make a more informed decision about whether this is a policy worth considering.

What Is It?

Well, firstly, if you are a sole business owner, then let’s save you some time: You don’t need to read any further because you can’t have partnership protection insurance when there is no partnership to protect. If however, your small business is one with one or more partners, then it’s a good idea for you to keep reading.

In a nutshell, partnership protection insurance provides a “safety net” of sorts in the event that one of the business partners suffers a serious illness, becomes permanently disabled or passes away.

In the event of death, partnership protection insurance enables the other partner/s to buy out the deceased partner’s share of the business from whomever inherits it. In the event of a partner suffering an illness or disablement, such a policy provides the other partner/s with the funds to buy out the incapacitated partner’s share directly from them.

In essence, partnership protection insurance enables a business

to continue operating should the worst occur.

What Are The Key Things To Consider?

Partnership protection insurance is one of those policies that requires you to consider things that are not at all pleasant. Having to consider the possibility of illness, permanent disablement or death befalling you or your partner/s is particularly confronting. However, having a plan in place should something like that happen is all part of being a responsible business owner.

If such a policy is relevant to your business, ask yourself the following questions:

  • If one of the partners in your business were to become permanently disabled, ill or pass away, would the business survive?
  • If a partner in the business were to pass away, who would own his or her shares? Would it be that partner’s family or someone else?
  • Would you and any other partners be comfortable working with whomever inherits a deceased partner’s shares, and would you be comfortable with this person being a partner in the business?
  • If something were to happen to one of the partners in your business, would the other partner/s be able to afford to pay him or her out?
  • If something were to happen to one of the partners in the business, would his or her family survive financially?

These are the questions you need to be asking yourself when making an evaluation about the relevance of partnership protection insurance to your small business.

Do You Need It?

As with any insurance policy, you should examine the pros and cons as they relate to your particular situation. If the added security partnership protection provides has piqued your interest, discuss it with your partners and evaluate the peace of mind it will provide versus the added cost. Consider your financial situations as individuals, as well as the economic viability of your business if something were to happen to one of you.

If you and your partner/s are still unsure about whether or not acquiring partnership protection insurance is a step in the right direction, ask a trusted financial adviser or insurance broker for their advice and go from there.

Important Information:

  • Bdm Financial Services may be able to assist you in addressing the ownership structures and purpose of a Keyman Insurance Policy.
  • This technical article is of a general nature only and should not be construed as financial advice or as a basis for making any financial investment, insurance or other decision.

* General Advice Warning – End of Page.

Financial Services Guide


The Financial Services Guide (FSG) is an important document that is designed to help you decide whether to use the financial services offered.

The main purpose of the Financial Services Guide (FSG) is to give you an overview of the financial services that are being offered.

By providing you the following information:

  • About us;
  • What kinds of financial services we are authorised to provide to you;
  • The process we follow to provide financial services;
  • How we, our Authorised Representatives (and any other relevant persons) are remunerated;
  • Are there any of our associations or relationships that might influence the financial services we offer?
  • How we collect, use and disclose the information you provide to us;
  • Our complaints handling procedures and external dispute resolution procedures including how you can access them;

To download my Financial Services Guide…….. Click-Here .


General Advice Warning:
The information contained in this website is for general information purposes only. The information is provided by BDM Financial Services and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

Before investing in any product BDM Financial Services recommends that you first obtain a copy of the relevant Product Disclosure Document before making any decision regarding the purchase of or investment in that product or service in order to ensure that it is suitable for your own personal financial needs and circumstances.

Michael Lobodarz, Authorised Representative (no. 256607), Director of BDM Financial Services Pty Ltd ABN 53 115 925 141, Corporate Authorised

Representative (no. 319619) of, The Financial Link Group Pty Ltd., ABN 12 055 622 967 Australian Financial Services Licensee (no. 240938)