Financial planning is really about… recommending that clients give up smoking

For Advisers

Obviously, discussing your client’s health requires sensitivity. But there is nothing really wrong with suggesting that your client look after themselves as well as possible. When this is done well, most clients appreciate the genuine concern of their adviser, something which adds to the overall enjoyment of the financial advice process.

When it comes to smoking, the recommended retail price for a cigarette is now more than $1 each. According to the Commonwealth Health Department, the average number of cigarettes smoked by an Australian smoker is 96 per week. This means that the average smoker is spending around $100 per week – after tax – on cigarettes.

Smoking is also related to a number of health problems, which leads to a triple whammy. Smoking means a lot more out of pocket expenses, and it often means a shorter working life. It also means that costs such as insurances are much higher than they otherwise would be.

For these reasons, giving up smoking is often one of the best financial decisions a client can make.

Adviser tip – here is how you might suggest it

Feel free to try these paragraphs in your next SOA:

We note from our discussion that you are a smoker. While we realise that this is a personal issue, it would be remiss of us not to point out that stopping smoking, or at least cutting back on smoking, is one of the single best financial moves that you can make.

The average cost of a cigarette is now more than $1. This means that a person in your tax bracket has to earn $1.42/$1.58/$1.81 per cigarette. If you were to dedicate this amount of pre-tax income to financing deductible super contributions, then you would be left with $1.21/$1.34/$1.54 extra in super assets. This amount could then grow in the tax-advantaged environment of the super fund for many years to come.  

In addition, the cost of your life insurances is higher because you are a smoker. Your life insurance premiums will lower if you give up smoking and maintain your status as a non-smoker for at least 12 months.

The Dover Group