Retirement Planning and Advice Application
The advice process
Retirement planning follows a structured process: establish the client's objectives, gather financial and personal data, identify issues, develop and present a Statement of Advice (SoA), implement, and review. Candidates must apply the best interests duty (s 961B) and the safe harbour steps, and ensure advice is appropriate to the client's circumstances.
Key planning levers
Advisers use contribution strategies (salary sacrifice, catch-up contributions), transition to retirement pensions, recontribution to build tax-free components, and sequencing of drawdowns to manage tax and Centrelink outcomes. Risk profiling and asset allocation must align with the client's horizon and liquidity needs.
Traps
Questions often test whether advice is personal vs general, whether the SoA meets disclosure requirements, and the interaction of strategies (e.g., a TTR pension does not reduce tax on earnings unless in retirement phase). Watch for clients exceeding the TBC or contribution caps when recommending a strategy.
Worked example
A 60-year-old wants to reduce tax while still working. A transition to retirement pension allows drawdown of 4–10% of the balance, but earnings remain taxed at 15% until retirement phase. The adviser must confirm the client has met a condition of release before recommending retirement-phase treatment.