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How Xtools+ can help you evaluate investment bond strategies with precision, accuracy and speed

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2 months ago

Long set aside by many advice professionals, changes in the financial landscape are driving renewed interest in investment bonds, with these uniquely structured products reemerging as another solution to help your clients on the path to achieve their financial goals. We explore the role of investment bonds in a financial planning strategy and how you can quickly evaluate the use of an investment bond for your clients.

In the Australian context, investment bonds refer to an investment-linked insurance policy (also called an insurance bond), as opposed to a debt security like a corporate or government bond. They hold distinct tax advantages for certain clients – all investment income (including realised capital gains) is taxed at 30% rather than your marginal tax rate – potentially delivering tax savings for those paying a higher marginal tax rate.

The Federal Government’s proposed $3 million cap on super balances, above which earnings would be taxed at a higher rate, underlines the importance of offering complementary investment strategies to address your client’s retirement planning . Investment bonds can be a compelling proposition for Australians investing for their retirement and for other needs, like improving social security entitlements or enabling children (or grandchildren) to pay university fees down the line or purchase a home.

How Xtools+ has evolved to meet growing demand

At Iress, we recognise that clients have individual and often complex financial situations and goals. We’re continually investing in our products so advice professionals are best-equipped to deliver on clients’ needs efficiently and effectively.

That’s why we’ve evolved Xtools+ to include a dedicated investment bond feature. This easy-to-use adviser tool, allows you to visually demonstrate the benefits of an investment bond strategy and merge the results into your advice documents. Critically, Xtools+ can show clients that you’ve rigorously tested your investment bond ideas to ensure all their circumstances are considered

For example, you can show how an investment bond can be used to help someone achieve their goal of early retirement, highlighting how much less tax they would pay compared to a managed fund. The client will also be able to compare investment returns, net of all fees and taxes. You can also exploit the power of Xtools+ to answer questions you may have, such as:

  • Will my client get the Commonwealth Seniors Health Card if they use an investment bond?
  • Should they use an ‘investment bond in trust’ structure to reduce Aged Care fees?
  • Will the health care/aged care savings make up for the additional tax, fees and administration costs?

You can project the balance of up to 20 investment bonds, which can be spread across the Client, Partner, Joint, Trust and Company.

To find out how Xtools+ can help you efficiently build strategy recommendations that most precisely meet your clients’ needs, get in touch.

If you’re an existing Xplan customer, you can find out more about investment bonds in the Iress Community.

Updated 2 months ago
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