Review Case Study:
Updated: May 24, 2021
"Chris is very knowledgeable in his field of expertise which ensured we covered off every known element to tailor the advice and select the most suited policy for me.
"Additional elements of covering my children was also a nice touch, as this was not something like I had ever considered going into this.
"...after establishing what my needs were Chris was able to provide me with solutions suiting my current situation, lifestyle and goals."
AFRM’s case studies over the past couple of years have focussed on client claims outcomes.
However, this time, we are focussing on the advice process itself.
We are providing an AFRM client’s review of the quality of advice and level of service provided by our Melbourne-based adviser, Chris Wlodarczyk.
This case study also highlights the importance of reviewing your financial risk management plan anytime your life circumstances change significantly.
Such was the case recently for Jason [name changed to protect client privacy]. A well-paid executive, with two children living at home, who had just finalised his divorce.
Jason had significant levels of Life and Total and Permanent Disability (TPD) cover through one of his two superannuation funds: each policy potentially paying benefits in excess of $2m. He also had Income Protection (IP) insurance through the same fund.
With his divorce finalised and all of the related financial matters settled, Jason wanted to start afresh on a new financial risk management strategy that reflected his current financial position and his desire to secure the financial future of his two children.
AFRM’s Chris Wlodarczyk was faced with an interesting brief. The issues Jason wanted analysed and addressed are summarised below:
All of Jason’s current insurance through superannuation was held within a fund with a relatively small balance that was being eroded by premiums of more than $5,500 per annum. Essentially, he had only kept the fund account active because of the Life and TPD cover it held.
Jason wanted to know how his current insurance through superannuation compared with other products in the personal life insurance market. Was it competitive? What would be some alternative recommendations?
Given he was now not married, Jason was wondering if he was now over-insured?
If Jason was over-insured, what are his options for reducing the annual cost of insurance premiums while still maximising the potential benefits? What are the trade-offs to be considered?
Given the limitations of his personal cash flow now being a single parent, would it be possible to have better and more cost-effective cover but have the premiums still paid out of a superannuation fund account?
What would the tax implications be on TPD benefits funded from superannuation?
Given his income had increased in recent years, Jason wanted advice as to whether the current level of IP cover was still adequate or relevant?
How much money does Jason need to set each of his children up with sufficient funds to put a deposit on a house or buy their first car?
He would need sufficient protection to cover the remainder of his mortgage (just under $500,000)
Now that he is divorced, could he structure his estate in such a way that, in the event of death or disability, the house would be directly inherited by his children?
Could AFRM quantify how much the medical costs might be in the event of suffering a permanent disability?
And finally, when considering the level of protection to be put in place, there had to be sufficient cover to fund the additional $100,000 that would be required to pay the private school fees required until both of his children finished school.
The issues listed above are a fairly typical set of considerations that AFRM advisers go through with our clients when undertaking discovery in order to develop a comprehensive financial risk management plan.
All of Jason’s needs were ultimately met. His existing policies under his minor superannuation fund were cancelled and new Life, TPD and IP policies were established through a new insurer.
However, he was able to split the payment of his premiums between his primary superannuation fund and his personal income in order to reduce the impact of premiums on his personal cash flow.
Thanks to AFRM’s adviser, Chris Wlodarczyk, the new protections put in place also offered extras through the new IP cover that allowed Jason to put in place financial protections for his children in case they suffered a significant trauma, became terminally ill and included a life insurance benefit for them also.
The resulting lump sum benefit is designed to cover the costs of looking after a very sick child, accessing the required medical treatment, any modifications to the family home or if the parent needed to stop work to be with their child.
So, after months of discovery and planning, Jason was happy with the outcome of AFRM’s advice.
How do we know? Because Chris asked Jason if he would be willing to answer six simple questions.
Jason’s responses to the questions are below:
How did you find the overall process of reviewing your insurance needs from beginning to end?
Excellent. Chris is very knowledgeable in his field of expertise which ensured we covered off every known element to tailor the advice and select the most suited policy for me.
Additional elements of covering my children was also a nice touch, as this was not something I had ever considered going into this.
Did you feel the advice provided reflected the needs of you and your family?
Yes, after establishing what my needs were Chris was able to provide me with solutions suiting my current situation, lifestyle and goals.
There was some back and forth with the underwriters on elements of my policy that Chris managed to have included when, early on, may have otherwise been rejected.
Did you feel there was sufficient communication with you during advice and implementation?
Yes. Absolutely, l was kept up to date every step of the way via Chris and everything was followed through via (AFRM Client Services Administrator) Estelle in a timely manner.
Would you like to see us do anything differently to improve the experience?
No, the experience was great for me, one that kept me engaged in something that can otherwise be deemed too difficult, not understood, or put in the too hard basket.
Based on the experience of dealing with AFRM and the quality of advice provided, would you feel comfortable recommending us to your friends or family?
Definitely recommend. I would have no hesitation in recommending Chris and AFRM in future, a very professional service being offered.
What was the most important benefit to you of receiving our advice? Peace of mind, Having the best cover for me/my family, Good value protection, Having it all taken care of by professionals, Knowing AFRM will assist at claim time, Other?
Peace of mind. All of the above most definitely, however peace of mind above all else to know the policy is in place now and is tailored to my needs.