You can read the latest articles and insights to help you understand the strategic uses of Education Bonds to provide the best financial advice to your clients.
The key to unlocking modern Education Bond strategies
As a Financial Adviser, you might be used to seeing a broad demographic range of clients come through your doors (or video screens these days!). Some clients might be a family looking to plan for the future. Wanting to ensure they’re protected, while starting to get serious about their wealth goals while the kids are young. Their common concerns tend to focus on day to day living costs being juggled with the cost of schooling.
Other clients you might see are in that pre-retirement stage. Where they’re seeking advice on how to make the most of their upcoming retirement, while also helping out their kids and grandchildren when they can.
It’s not uncommon for pre-retirees and retirees to be giving some thought to how they find the right balance between helping their children with the education costs of their grandchildren, while ensuring they’re saving for their own retirement too.
One thing we know for sure, Financial Advisers are certainly a great source of expertise for many people in helping them to balance out a client’s financial and lifestyle goals.
Education funding – it takes a village
Over $40 billion is spent each year on Education from private sources(1). With many grandparents, and parents looking to ensure their children and grandchildren have access to educational opportunities. But for many, this can come at a cost that their budget might not allow. Many young families are already facing challenges around housing affordability, their own HECS debt and living costs, so it’s becoming increasingly common for grandparents to be a source of financial assistance for education expenses.
According to the Futurity Planning for Education Index(2), more than ever, the costs associated with education are placing a big financial burden on Australian families. Which supports the notion that education costs are fast becoming a must have consideration in a financial plan.
Futurity’s Education Bonds can help your clients with a solution to lifelong education funding. As well as helping your client’s accumulate and protect wealth tax-effectively, provide for their children or grandchildren’s future, and pass on wealth exactly as intended.
Education Bonds have significant taxation benefits and can deliver greater “after-tax” investment outcomes against other investment types. They’re the most tax effective investment alternative to super, with the flexibility to withdraw at any time for any purpose.
Unlike other child or education purposed investment and savings products available, our Education Bond range offers an unrivalled level of flexibility including the ability to:
- Enjoy the Education Tax Benefit that allows your client to receive a refund on the tax Futurity pay on the investment earnings. So for every $100 your client withdraws from their earnings for education purposes, their balance only reduces by $70. This means that your client's bond will show greater performance over its term because of the account being topped up by the Tax Benefit.
- access capital tax free at any time
- discretion to appoint up to ten Education Beneficiaries in the one solution
- add or remove education beneficiaries at any time
- add a Bond Guardian for future estate planning
The Bond can be set up for anyone wanting to support loved ones in their education journey and to fund other life events. With clients having the option to contribute funds as a lump sum or at regular intervals.
It’s easy to think this strategy is just about education. Many savvy Advisers are finding solutions within Education Bonds for a range of client wealth goals, including long-term investment growth, intergenerational wealth transfer, tax effectiveness and estate planning.
If you’re looking for what options are out there for your clients, Futurity Investment Group’s new style of Education Bonds, are drawing plenty of Adviser interest. Education Bonds in years gone by were often limiting. We are now in a great position to offer you and your clients(3) both Individual and Family Education Bond options.
The addition of the Family option gives you an alternate investment solution to solve a complicated problem for your clients.
$3.5 trillion dollars in wealth set to be transferred
Family Education Bonds provide a tax-effective solution(3), offering Financial Advisers a new alternative for the growing demand in intergenerational wealth planning.
While education funding is a unique feature, the Bond offers so much more.
- An Education Bond can be established for one beneficiary where the Bond Owner wants to provide for them individually (and discretely if desired).
- The Family Education Bond can be used as a tailored education-purposed family trust, that retains all the key features and tax benefits relating to traditional education or investment bonds.
- Transfers can be future dated enabling full control and access to the Bond Owners until the Bonds mature. Arrangements can be altered to suit changing circumstances.
In this way, Education Bonds can make the perfect vehicle for families of all types and across multiple generations.
With the $3.5 trillion dollars in wealth set to be transferred over the next 20 years(4), many of your clients will be looking for tax-effective ways to invest this wealth, put plans in place to securely arrange what happens to their estate, and control who and when their wealth is transferred.
If you’re looking for a simple way to protect and grow your client’s wealth, while solving how and when to transfer their wealth to the next generation, adding an Education Bond into your client’s portfolio is a worthwhile consideration.
With education funding now needing more financial planning than ever, here at Futurity we’d love to help your clients achieve their financial and lifestyle goals.
- Source: Australian Council for Educational Research (ACER), 2015
- Media release: Australia’s most affordable and expensive cities and regions (including remote areas) for a government, catholic and independent education revealed.
- Generally you will benefit if you are a Bond Owner on middle to high personal marginal tax rates. Refer page 7 Part A PDS.
- Research from Griffith University estimates that over the next 20 years, Australians aged over 60 will transfer an estimated $3.5 trillion in wealth.
Product issuer is Futurity Investment Group Limited, ACN 087648879, AFSL 236665. We provide general advice only and do not take into account any individual’s objectives, financial situation or needs. Financial advisers remain responsible for advice provided to their clients. The Product Disclosure Statement (“PDS”) is available here or by calling 1300 345 456 and should be read in full. The 6 % p.a. used in the case study is for illustrative purposes and assumes a long term investment timeframe and is net of fees and Fund Tax. It is not an indication of expected returns, nor is it a financial forecast or prospective financial information. Any taxation information is current as at the date publication and is based upon our general understanding of relevant taxation laws. Changes to these laws and applicable tax rates may impact the Education Tax Benefit, Tax-Free Thresholds, MTRs and the application of benefits associated with Investment Bond Tax Rules.